Written by Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s CIO – Multi Asset, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
US first-quarter earnings reports took centre stage last week, with the major benchmarks ending mixed. UK and European stocks continued their ascent, while US stocks lagged slightly. However, US regional bank stocks rebounded, buoyed by reports of stabilising deposited flows. Bonds weakened, as stabilising banks reduced the potential imminent need for rate cuts.
As of Friday, 88 S&P 500 Index companies had reported earnings, with a year-over-year aggregate decline in S&P 500 earnings of roughly 7%. Analysts polled by Refinitiv I/B/E/S and FactSet expect the remaining reports to show an overall decline for the S&P 500 for the second consecutive quarter, although early reports have surprised on the upside.
Chinese Foreign Minister Quin Gang warned of “dangerous” consequences for countries interfering in the tensions between China and Taiwan during the Lanting Forum in Shanghai. Meanwhile, South Korean President Yoon Suk Yeol accused China of challenging the rules-based international order, and the Philippines and the US conducted a large joint military exercise in the region earlier this week.
UK annual inflation decreased to 10.1% YoY in March 2023, down from the previous month’s 10.4%. While price pressures from food, non-alcoholic beverages, recreation and culture, and miscellaneous goods and services continued to accelerate, inflation eased for transports, restaurants, and hotels.
ECB policymakers were split over the decision to raise benchmark interest rates by half a percentage point, according to the minutes of the March meeting. A “very large majority” voted in favour of the decision, with some members of the Governing Council preferring a pause until tensions in the financial market subside.
The price of oil fell more than 5% for the week, to less than $78 per barrel, reversing recent gains and leaving prices around their levels of a month earlier, when production cuts by Saudi Arabia and other countries sent prices higher.
The European Central Bank (ECB) announced the publication of its review of EU banks’ climate and environmental risk disclosure practices, indicating that while reporting has improved over the past year, very few banks are prepared to meet regulatory disclosure requirements set to take effect this year.
This week, investors will be focused on US earnings season as it kicks into a higher gear with Microsoft, Alphabet, Facebook, Amazon, Coca-Cola, Visa, Boeing, Mastercard, and Exxon Mobil set to report. Also in the US, attention will be on the advance estimate for the Q1 GDP growth rate. Elsewhere, GDP figures will be released for the Euro area.
Sources: Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s Deputy CIO – Multi Asset, Marlborough’s Multi-Asset Investment team, Financial Times, The Wall Street Journal, John Hancock, Morningstar, Trading Economics, ESG Today.
Risk Warning: These are Nathan’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
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