USA
The U.S. economy displayed a mixed picture during the week, as headline inflation continued to show signs of moderation, easing to an annualized rate of 3.2%. However, initial jobless claims climbed to 230,000, marking a week-over-week increase of 10,000 and raising market concerns about softening labor dynamics. The March CPI report, released midweek, revealed a slight uptick in core services inflation, complicating the Federal Reserve’s path toward potential rate cuts. Fed minutes from the latest FOMC meeting indicated a continued hawkish stance, delaying hopes of a June pivot. This cautious tone, coupled with rising Treasury yields, pressured equities. The S&P 500 fell 0.9%, while tech-heavy NASDAQ dropped 1.2%, as growth stocks reeled from the higher-rate outlook. Dow Jones Industrial Average was relatively resilient, down only 0.6%, supported by defensive names in healthcare and consumer staples.
Europe
Europe’s macro landscape was uneven but hinted at stability. Preliminary Q1 GDP growth across the euro area came in at 0.6% QoQ, with modest contributions from Germany and France. Inflation remained sticky at 2.6%, though core components showed signs of stabilization. The European Central Bank’s minutes suggested growing consensus around a possible rate cut in June, reinforcing a dovish narrative that buoyed sentiment in fixed-income markets. However, geopolitical risks—particularly persistent energy volatility due to Middle East tensions—tempered equity performance. The STOXX Europe 600 declined by 0.3%, while Germany’s DAX 40 and France’s CAC 40 slipped by 0.4% and 0.6% respectively, dragged down by underperformance in autos and luxury sectors. The UK’s FTSE 100 bucked the trend with a 0.2% gain, lifted by strong performances in energy and materials, while Spain’s IBEX 35 edged up 0.1% on positive bank earnings.
Japan
Japan’s markets experienced moderate gains amid favorable export conditions and a persistently weak yen. The Nikkei 225 rose 0.5%, and the broader TOPIX gained 0.3%, as electronics and consumer discretionary sectors led the advance. Economic data for March revealed a composite PMI reading of 52.9, indicating expansion in both manufacturing and services. The Bank of Japan continued its measured approach, though rising inflation—reaching the BOJ’s 2.0% target—has begun to stir debate about normalization of policy later in the year. The yen weakened further against the dollar, prompting verbal intervention from finance officials, though actual FX action was not taken. Investors also responded positively to improving export orders, especially to China and Southeast Asia, despite global macro uncertainties. The market outlook remains cautiously optimistic, hinged on currency dynamics and global tech demand.
China
China emerged as the standout performer of the week, buoyed by a series of pro-growth policy signals and improving consumer sentiment. The Shanghai Composite rose by 0.9%, while the Hang Seng Index advanced 1.2%, supported by tech and consumer sectors. Authorities unveiled a new infrastructure package targeting transportation and green energy, which helped lift sentiment across construction and materials sectors. Composite PMI came in at 51.6, with manufacturing surprising to the upside, reflecting both domestic demand resilience and stronger export flows. Inflation remained low but slightly firmer at 1.4% YoY, signaling the early effects of reflationary policy. However, the U.S.-China trade narrative continued to cloud the tech sector, especially after Washington hinted at tightening restrictions on AI chip exports. Despite this, capital flows into Chinese equities increased, driven by foreign investor optimism on near-term policy tailwinds and undervaluation of key sectors.