Market developments
Equities:
A rally in the world’s largest technology companies, particularly Microsoft and Alphabet, has lifted stocks and provided relief to investors concerned about the economic backdrop and the potential for rate cuts this year. The strong fundamentals and spending on artificial intelligence and cloud computing by big tech companies have reinforced investor confidence, offsetting worries about the macroeconomic environment. The S&P 500 hit 5,100 as the index increased by 2.7% while the Nasdaq was up 4.2%.
Fixed income:
There was some relief as the Federal Reserve’s favoured price gauge, the personal consumption expenditures (PCE) index, came roughly in line with estimates, keeping rate cuts on the table for 2024, likely towards the end of the year. The mix of macroeconomic data this week drove global rates higher and bond prices lower this week.
Commodities:
Oil prices rose this week, the increase was driven by signs of a tightening physical market, including a drop in U.S. crude stockpiles to the lowest since January and strengthening supply-demand indicators. However, gains were limited by U.S. economic data showing persistent inflation in March, reinforcing concerns about price pressures.