Global Stock Market Weekly Update: Mixed Signals from the US, Europe, and Asia
Global Stock Market Weekly Analysis (29 Jan – 2 Feb 2024)
Global stock market indexes closed mixed for the week ending on February 2nd. The US markets gained and Europe declined, while the Asian stock market indexes mostly closed higher this week. The market dynamics are influenced by the remarks of US Fed Chair Jerome Powell, quarterly earnings, and economic data.
The US Stock Markets – Weekly Updates
The US equity benchmarks closed higher over the week, as investors assessed significant earnings reports and economic data. It was the busiest week for traders as several mega-caps tech companies announced their fourth-quarter earnings.
The S&P and Nasdaq fell sharply on Wednesday following weak earning guidance from Microsoft, Alphabet, and chipmaker AMD. However, both indices bounced back after robust quarterly earnings were released by Meta Platforms and Amazon later during the week.
The Federal Reserve policy meeting was concluded on Wednesday, and as widely expected, the central bank left the key rates unchanged. The post-meeting conference of Fed Chair Jerome Powell hit the market sentiments after he said that a March rate cut is unlikely.
The chances of an early rate cut were further reduced on Friday after the Labor Department reported the strong job report. The employers added 353,000 nonfarm jobs in January which was much higher than the expectation of 185,000.
The Average hourly earnings also surprised the markets on the upside and rose 0.6%, bringing the year-over-year increase to 4.6%. The unemployment rate remained steady at 3.7% as compared to December, but the average workweek shrunk unexpectedly from 34.3 to 34.1 hours.
The strong monthly job reports surged the Treasury yields on Friday. The 10-year Treasury yields climbed to 4.023% after the job report, it was settled below 4% at 3.878% on Thursday. According to the CME FedWatch tool, the chances of easing rate cuts in March reduced to 20% from 70% after the Fed’s monetary policy and job reports.
European Stock Market Indexes- Weekly Updates
European stock market indexes mostly closed lower during the week, however, the pan-European Stoxx 600 index ended almost flat. The major indexes France’s CAC, Germany’s DAX, and the UK’s FTSE 100 ended in the red, while Italy’s FTSE MIB gained this week.
Surprisingly, the eurozone economy managed to avoid a recession in the last quarter of 2023. Gross domestic product (GDP) during the period was unchanged compared with the previous three months’ 0.1% contraction.
The annual consumer price inflation continued to move in the right path, as the headline inflation rate slowed to 2.8% in January from 2.9% in December. The core inflation rate excluding volatile food, energy, alcohol, and tobacco prices, also ticked lower to 3.3%.
The Bank of England (BoE) left its key interest rate unchanged at an almost 16-year high of 5.25% but the policy outlook remains dovish as it signals considering lowering interest rates if there is more evidence that inflation is set to fall to the 2% target.
The worst of the UK’s housing market is almost over, as the Nationwide Building Society’s index of house prices was stronger than expected in January, rising 0.7% since December.
Asian Stock Markets Updates
The Asian stock market indexes closed mostly higher during the week. Indian stock markets snapped a two-week losing streak and ended higher, you can read the Indian stock market weekly report here. The stock market indices of China and Hong Kong ended in the red, while equity benchmarks of Australia, South Korea, Japan, and India ended in the green this week.
Stock MarketWeekly Update- Japan
Japan’s stock markets ended the week on a positive note. Strong corporate earnings and tourism uplift local companies in Japan. Nikkei 225 gained more than a percent following gains from Wall Street this week.
However, the upside remained capped, as the Purchasing Managers’ Index (PMI) data, collated by au Jibun Bank, showed that Japanese manufacturing activity slowed in January, due to continuous falls in output and new orders. Manufacturers also faced a significant surge in price pressures during the month, as cost burdens escalated notably due to higher prices of raw materials, labor, and fuel.
Stock Market Weekly Update- China & Hong Kong
China’s stock markets closed sharply lower during the week. The weak economic data and the pessimistic news on the property sector dented the market sentiments. The Shanghai index fell sharply by 6.19% at 5 year low.
The economic data released during the week provided a mixed picture of China’s economy. The official manufacturing purchasing managers’ index (PMI) rose slightly to 49.2 in January from 49.0 in the previous month but remained in contraction.
The nonmanufacturing PMI data came slightly higher than expected 50.7 in January from 50.4 in December. On the other hand, the private Caixin/S&P Global survey of manufacturing activity data holds steady at 50.8 in January, exceeding expectations and achieving growth in its third straight month.
Hong Kong court ordered China’s former property giant Evergrande to be liquidated as the company failed to reach a restructuring agreement with its creditors since it defaulted on its offshore bonds in December 2021. This hit the property market sentiments in China and dented the stock market sentiments in both the Chinese and Hong Kong markets. In Hong Kong, the Hang Seng Index closed lower during the week.
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