Weekly Market Wrap 31/03/2023

The UK has avoided a recession and joined the CPTPP, key eurozone inflation data fell sharply and the US awaits key inflation data.

Dealmaking hit a 10 year low as the banking crisis has hit confidence and the future of shock-absorbing CoCo bonds look uncertain in the aftermath of Credit Suisse’s being written down to zero, despite equity investors retaining some value.

UK Market 

The UK market ended the week up. The UK has avoided a recession as a revised reading saw the economy grow in the final months of 2022 (+0.1% Q4 vs. e. 0.0) and the Q3 figures were revised upwards; the UK remains the only advanced economy smaller than before the pandemic.

The UK has struck an agreement to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade block, hitting the headlines as the biggest trade deal since Brexit but forecast to add a mere 0.08% to GDP.

UK House Prices posted their steepest falls since 2009; down 3.1% on the year to March. The government announced that the minimum wage is set to increase by 9.7% in April.

US Markets

The S&P 500 is currently ending the week up 2.83% at 4,051 and the NASDAQ is 1.54% higher at 12,963. Markets were muted on Friday ahead of key inflation data due to be released.

Trump’s indictment sets the US on an uncertain course politically. Trump becomes the first president to be criminally charged. An indictment, or even a conviction, would not bar Trump from running for president or serving as the Republican nominee.

European Markets 

The Euro Stoxx 50 is currently up 4.24% at 4,304, the DAX is 4.29% higher at 15.596, whilst the CAC 40 has gained 4.13% to 7,304.

Key eurozone inflation data showed inflation falling sharply to 6.9% from 8.5% as energy costs recede; core prices excluding energy costs accelerated. The ECB will be closely watching the inflation data and the fragility of the banking system to guide its ongoing interest rates strategy.

Fixed Income

Yields on 10-Year US government bonds rose slightly this week, reaching 3.55%. Benchmark yields rose across the board for developed markets as the banking crisis receded.

Commodities

Brent Crude gained by 5.68% this week, reaching $79 per barrel, boosted by positive news on the Chinese economy as China’s manufacturing PMI showed a reading above expectations.

The Week Ahead 

Monday – US Manufacturing PMI

Tuesday – RBA Interest Rate Decision

Wednesday – US Unemployment

Thursday – US Initial Jobless Claims

Friday – Good Friday (Markets closed)

*Price changes as of last week’s close unless stated otherwise.