Global stock markets enjoyed another stellar week as central banks remain on track to start cutting interest rates in the coming months.
Both the US Federal Reserve and the Bank of England (BoE) kept rates on hold at their March meetings, as widely predicted, but encouraging comments from policymakers mean markets now expect three reductions apiece from the institutions in 2024.
Once again, rises in oil prices threatened to spoil the party, with a spike in crude futures at the start of the week resulting from solid Chinese economic data, as well as further signs of tension in the Middle East. However, investors remained firmly focused on the imminent easing of monetary policy as well as further positive developments in artificial intelligence (AI).
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.8% up for the week so far, with the S&P 500 gaining 2.4%. These advances took both indices to all-time highs. Monday saw solid gains among technology stocks following news of a groundbreaking AI deal between two major software companies, while upbeat comments on Wednesday from Fed chair, Jerome Powell, reinforced hopes of a soft landing for the US economy following recent macroeconomic turbulence. Thursday’s fall in unemployment claims and signs of strong growth in residential property sales added to the general sense of optimism.
UK
In the UK, the FTSE 100 closed on Thursday 2% up for the week so far. This came after a larger-than-expected decline in inflation increased the likelihood that interest rates would be cut before the summer. The UK consumer prices index declined to 3.4% in February, its lowest level since 2021. Data published during the week showed that rises in the price of factory raw materials were also slowing, while output in the manufacturing sector appears to be turning a corner after months of sluggish performance.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 1.3% for the week, while France’s CAC 40 gained 0.2%. Confidence among German businesses has risen despite the country’s economic challenges, while February’s inflation figure for the eurozone was confirmed to have fallen to 2.6%. Hopes that the bloc could avoid a recession in 2024 drove gains among consumer stocks such as carmakers and travel companies.
Asia
In Asia, the Hang Seng index in Hong Kong gained 0.9% after latest data showed signs of a tentative recovery in the Chinese economy, with a rise in factory output and investment in February. The country’s property sector remains under pressure, however, with spending on construction projects declining by 9% in the first two months of the year. Japan’s Nikkei 225 index of leading shares, meanwhile, surged 5.4% to another record high despite the Bank of Japan ending its longstanding negative interest rate policy on Tuesday. Although deposit rates were raised to 0%, the fact the policy had been widely flagged in advance meant investors took the news in their stride, and there was no significant further strengthening in the yen.
March 15 | March 21 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7727.4 | 7882.6 | 2.0 |
FTSE 250 | 19512.9 | 19741.3 | 1.2 |
S&P 500 | 5117.1 | 5241.5 | 2.4 |
Dow Jones | 38714.8 | 39781.4 | 2.8 |
DAX | 17936.7 | 18173.8 | 1.3 |
CAC 40 | 8164.4 | 8179.7 | 0.2 |
ACWI | 767.6 | 783.3 | 2.0 |
Hong Kong Hang Seng | 16720.9 | 16863.1 | 0.9 |
Nikkei 225 | 38707.6 | 40815.7 | 5.4 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 21 March 2024.
