Global Markets Weekly Report

Global Markets Weekly Report


Stocks moved higher over the week, with large-cap growth stocks and the technology-heavy Nasdaq Composite Index outperforming the broader market. Several tech giants recorded solid gains, including Facebook parent Meta Platforms and chipmaker NVIDIA. Energy stocks underperformed as oil prices pulled back early in the week. The week brought the unofficial start of earnings season, with the nation’s four largest banks—JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo—reporting fourth-quarter results on Friday.

Data releases on the week’s light economic calendar came in roughly in line with expectations, but investors appeared to pay especially close attention to inflation data. Stocks wavered a bit on Thursday morning following the Labor Department’s release of consumer price inflation data. Headline prices rose 0.3% in December, a tick more than expected, but core (less food and energy) costs also rose 0.3%, in line with consensus. For 2023, core prices rose 3.9%, marking the slowest 12-month pace since mid-2021.

The labor market appeared to be in good shape as the new year began. The Labor Department reported that 202,000 workers filed for unemployment benefits in the previous week, well below expectations and the lowest number since mid-October, while 1.83 million filed continuing claims, also the lowest level since October. Fixed income investors appeared unswayed by the modest upside surprises in the consumer inflation data, with the yield on the benchmark 10-year U.S. Treasury note falling back below 4% over the week.


In local currency terms, the pan-European STOXX Europe 600 Index ended the week little changed, as traders assessed the prospect of interest rates staying higher for longer than previously expected. Major stock indexes were mixed. Germany’s DAX added 0.66%, France’s CAC 40 Index gained 0.60%, and Italy’s FTSE MIB ticked modestly higher. The UK’s FTSE 100 Index fell 0.84%.

European government bond yields endured a volatile week as dovish comments by European Central Bank (ECB) policymakers were offset by moderating market expectations for an interest rate cut in the near term. The benchmark 10-year German government bond yield ended the week near 2.2%. In the UK, the yield on the benchmark 10-year government bond edged higher after data indicated that Britain’s economy grew slightly more than expected in November.


Japan’s stock markets registered strong gains over a holiday-shortened week, with the Nikkei 225 Index rising 6.6% and the broader TOPIX Index up 4.2%. The continuation of highly stimulative monetary policy and weakness in the yen, which boosted Japan’s exporters, helped the indexes rally to their highest levels in almost 34 years.

Meanwhile, the yen hovered at its lowest levels in around a month, weakening past JPY 145 against the U.S. dollar, as a hot U.S. inflation print tempered expectations about how soon the Federal Reserve might cut interest rates. The yield on the 10-year Japanese government bond fluctuated around 0.6% during the week, struggling for clear direction.


Chinese equities retreated as data showed that China’s deflationary cycle persisted into December, raising expectations of increased government support in 2024. The Shanghai Composite Index declined 1.61%, while the blue chip CSI 300 gave up 1.35%. In Hong Kong, the benchmark Hang Seng Index fell 1.76%.

The consumer price index fell 0.3% in December from the prior-year period, the third monthly decline, easing from November’s 0.5% drop. The latest inflation data raised expectations for some analysts that China’s central bank would lower its key policy rate and inject more cash into the financial system at its next policy meeting amid worries that sustained deflation will increasingly weigh on the economy.

In geopolitical developments, Chinese officials announced new sanctions on five U.S. defense companies in response to the U.S.’s latest weapons sales to Taiwan.


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