Global Stock Market Weekly Analysis (18-22 Sept 2023)
The global stock market indexes mostly closed lower during the week. The world markets mainly focused on the interest rate decisions from various central banks, rising crude oil prices, and economic data during the week. The major equity market indexes from the US, European, and Asian stock markets ended lower, while China ended with gains during the week.
The US Stock Markets – Weekly Updates
The US stock market indexes closed lower during the week, as investors reacted to the hawkish tone of Federal Reserve Chair Jerome Powell in the latest monetary policy meeting. The equity benchmarks fell four out of five trading sessions during the week, while the S&P 500 index recorded its largest one-day loss in six months on Thursday.
As widely expected, the Fed kept the interest rate steady but signaled one more rate hike in the current year. It expects the interest rate to remain higher for a longer period and indicated fewer rate cuts in 2024 and 2025. In addition to this, the Fed has raised its growth forecast, as the economy is stronger than it earlier expected.
The fear of higher interest rates for a longer period pushed the Treasury yields at multiyear higher and dragged the stock markets. The 10-year Treasury yields climbed to 16 years high at 4.498% on Thursday. In addition to the Fed’s policy updates, the United Auto Workers (UAW) strike and potential US government shutdown also impacted the US markets during the week.
European Stock Market Indexes- Weekly Updates
European stock market indexes ended lower for the week, as investors worried after the central banks signaled that interest rates would remain elevated for a long period. Higher crude oil prices and weak economic data also hit investor’s sentiments during the week. All major equity indexes in the region, CAC, DAX, and FTSE ended in the red on a weekly basis.
The Bank of England’s (BoE) surprise move to keep the key interest rate unchanged after the UK’s retail inflation came a tick lower capped the UK’s FTSE on the downside. Among the other Central Bank’s interest rate decisions in the region, the Swiss National Bank paused the interest rate for the first time since March 2022 while Sweden’s Riksbank raised its policy rate by 25 basis points.
The European Central Bank (ECB) officials confirmed there is another rate hike after the US Fed’s hawkish stance last week dented the market sentiments. On the economic front, The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, which combines activity in the manufacturing and services sectors, came slightly higher but remains below 50-mark. Manufacturing captivity continued to shrink the most, while services sector activity was down for a second month in a row.
Asian Stock Markets Updates.
The Asian stock market indexes mostly closed lower this week. Investors remained focused on the interest rate decision from several central banks and economic data during the week. Indian stock market indexes snapped a three-week winning streak and ended lower. You can read about the Indian stock market updates here.
Japanese Stock Market
Japan’s stock market index also closed in the deep red last week, the sentiment was hit as the US Fed signaled to keep interest rates elevated for a longer tenure to curb inflation. Meanwhile, as widely expected Bank of Japan has unchanged its monetary policy decisions on Friday’s outcome. BoJ retains its dovish stance and pledged to add stimulus whenever it is required.
Japanese Yen weakened due to continued monetary policy divergence between the hawkish Fed and the dovish BoJ, Yen weakened to around JPY 148.3 from 147.8 in the previous week against the U.S. dollar. However, Japan’s consumer price index (CPI) inflation slowed to 3.2% in August, at a 3-month low, down from 3.3% in July but remains above the BoJ’s 2% target. Meanwhile, Core inflation was unchanged at a four-month low of 3.1%.
Chinese Stock Market
Chinese stock market closed slightly higher during the week, as investors are now more optimistic about the country’s economic growth. The market sentiments remain positive based on the previous week’s economic data which showed some improvement and raised hope of economic recovery in China. There was no major economic data released in China during the week.
China’s cabinet, the State Council, pledged on Thursday to accelerate measures to consolidate the country’s recovery and continue supporting growth in 2024. Meanwhile, the People’s Bank of China left their one- and five-year loan prime rates unchanged during the week.
In Hong Kong, the Hang Seng Index declined during the week.
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