Market developments
Equities: Global equities posted a broadly positive week, with the MSCI All Country World Index hitting a record high on Thursday, driven largely by renewed enthusiasm for the artificial intelligence trade and cooling US inflation data that reduced the probability of a near-term Federal Reserve rate hike. Asian markets were a standout, with South Korea’s Kospi entering a technical bull market on the back of strong AI-related semiconductor names including Samsung Electronics and SK Hynix.
Fixed Income: Government bond markets were shaped by two competing forces this week: a mid-week rally driven by benign US inflation data, followed by a Friday selloff as long-end yields reasserted themselves globally. The U.S. also sold $25 billion of 30-year bonds at the highest yield since 2001, reflecting investor demand for term premium even as the front end rallied.
Commodities: Energy markets remained volatile, dominated by the ongoing Iran conflict and disruptions to Strait of Hormuz flows. The IEA warned mid-week of a supply shortfall of 1.8 million barrels per day this quarter, more than double earlier projections, as renewed hostilities and maritime disruptions derailed a Middle East production recovery.