Weekly Market Review

21/04/2023 Product news Back to All News & Insights

A mixed week for markets as strong Chinese economic growth collides with varied company results

It has been a mixed week for markets, with China reporting economic growth of 4.5% in the first quarter year-over-year, stronger than forecasted, suggesting a strong reopening recovery following the lifting of Covid restrictions. Whilst company results in the developed world have been mixed for the current reporting season. Of the companies that have reported to date, although 73% of those listed on the main US index have beaten earnings per share expectations, this is below the trend average. Towards the end of the week, data released for initial jobless claims in the US rose above expectations. Bond markets took this as a signal that high interest rates are beginning to take the steam out of the economy, leading to a rally in government bond prices at the end of the week.

As of 12pm on Friday, London time, US equities fell 0.2% over the week, with the US technology sector falling by 0.5%. European markets were down a little, losing 0.1%, whilst UK stocks rose by 0.3%, led by large cap stocks, whilst UK mid cap stocks fell by 0.6%. Japanese equities rose by 0.8%, whilst Australian stocks fell by 0.4%. Emerging markets were down 1.1%, with Latin American stocks being the most negatively impacted, falling by 2.0%, not helped by a sharp selloff in the oil price despite production cuts announced by Opec+ (Organisation for Petroleum Exporting Countries plus Russia) in recent weeks.

UK gilts sell-off as further rate tightening anticipated following stronger than forecasted inflation data

US treasuries were broadly unchanged by the end of the week, however, this masked a sell-off earlier in the week before a subsequent rally post the release of the initial jobless claims data on Thursday. 10-year US Treasury yields are currently trading at 3.53%. German bund yields are trading at 2.47%, whilst UK yields rose, with yields moving inversely to price, now trading at 3.72%. UK inflation data failed to fall by as much as forecast, with the annual consumer price index rising by 10.1% for the year to March, versus expectations of a 9.8% increase. This has raised projections for further rate hikes by the Bank of England.

Crude oil falls despite Opec+ production cuts

Crude oil fell by over 6%, with Brent crude now trading at $81.0 a barrel. Gold gave up some of its recent gains, falling by 0.9% over the week, now trading at $1,998 an ounce, however, it remains over 7% higher for the year. Iron ore fell by just over 7%, and copper was down by 1.8%, now priced at $8,865 a tonne.