Weekly Market Report: March 11, 2024

USA

Growing hopes that the Federal Reserve might begin cutting interest rates sooner rather than later appeared to help bring the large-cap S&P 500 Index and S&P MidCap 400 Index to new record intraday highs, alongside the Nasdaq Composite before pulling back late Friday. Small-cap and value shares outperformed, while mega-cap tech shares lagged due in part to a decline in Apple following reports about slowing iPhone sales in China.

On Wednesday, the Fed reported in its periodic Beige Book survey of regional economic conditions that consumers were showing more sensitivity to rising prices, while the Labor Department said that job openings fell in January to their lowest level in three months. Moreover, the unemployment rate rose unexpectedly from 3.7% to 3.9%, its highest level in over two years. In a positive sign for inflation, average hourly earnings rose 0.1%, below expectations and down sharply from January’s 0.5% increase.

Europe

STOXX Europe 600 Index gained ground for the seventh straight week, hitting a record high on the way to a 1.14% gain. Among the major stock indexes, Italy’s FTSE MIB gained 1.43%, France’s CAC 40 Index added 1.18%, and Germany’s DAX ticked up 0.45%. The UK’s FTSE 100 Index declined 0.30%.

Ten-year government bond yields for Germany, Italy, and France declined after the European Central Bank (ECB) left its monetary policy unchanged and signalled that interest rates could be cut in June.

Japan

The performance of Japan’s stock markets was mixed over the week, with the Nikkei 225 Index finishing 0.56% lower and the broader TOPIX Index gaining 0.64%. Exuberance around artificial intelligence and solid corporate earnings boosted sentiment.

Investor speculation continued about the Bank of Japan’s (BoJ’s) likely monetary policy trajectory—with signs of increased conviction that the central bank could be closer to raising short-term interest rates out of negative territory than previously thought. Against this backdrop, the yield on the 10-year Japanese government bond rose to 0.73% from 0.71% at the end of the previous week. The yen appreciated sharply to around JPY 147.4 against the U.S. dollar from about 150.1 the prior week.

China

Chinese equities gained as the government’s recent market stabilization measures lifted investor confidence despite an uncertain economic outlook. The Shanghai Composite Index rose 0.63%, while the blue chip CSI 300 added 0.2%. In Hong Kong, the benchmark Hang Seng Index gave up 1.42%.

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