It was generally a positive week in markets across the world, but it is obvious that risks remain across particularly with the ongoing conflict in Ukraine, rising inflation and the prospect of central banks raising interest rates aggressively. Russia’s stock markets partially reopened in a shortened and volatile trading session on Thursday, as the country’s invasion of Ukraine reached the one-month mark.
Last week’s performance – major stock markets
| S&P 500 | +1.79% |
| Nikkei 225 | +4.93% |
| CSI 300 | -2.14% |
| Euro Stoxx 50 | -0.89% |
| FTSE 100 | +1.06% |
Commentary
US:Mixed economic data as investors worry about interest rates
Stocks had another positive week, led by technology stocks. A continued rise in many commodity prices boosted the energy and materials sectors.There are still worries amongst investors about how aggressive the US central bank, the Federal Reserve, may be in raising interest rates this year. Developments in Russia’s war against Ukraine also remained on investors’ radar.Economic data published during the week was mixed.
Japan:Prospect of further economic stimulus boosts sentiment
Japan’s stock markets rose over the week. Sentiment was boosted by expectations of further economic stimulus and reassurances from the Bank of Japan that it will continue its support for the economy. Amid growing pressure on Prime Minister Fumio Kishida to act to cushion the impact of rising fuel and commodity prices on households and firms, the government is set to announce an additional package of measures to boost the economy.
China:Fears for US-listed companies and Covid surge dampens sentiment
Chinese markets fell amid delisting fears for US-listed Chinese companies, which includes some heavyweight names like Alibaba, arising from a dispute over auditing standard. Reports of a worsening coronavirus outbreak also depressed investor sentiment. China counted more than 56,000 cases nationwide since 1 March. Hong Kongis suffering one of the deadliest outbreaks since the pandemic began. In the financial hub of Shanghai, the number of COVID-19 infections surged more than 60% to a record on Friday.
Europe: Economic outlook weighs on business confidence
Shares weakened amid the ongoing Russian invasion of Ukraine and the prospect of tighter monetary policy (i.e. a higher interest rate environment). EU leaders tightening existing sanctions but stopped short of imposing additional curbs on Russian energy imports. The U.S. agreed to supply the EU with additional liquified natural gas this year, with the aim of reducing the bloc’s dependence on Russia. Business confidence sank amid growing concern about the economic outlook.
UK: Sunak errs on the side of caution as inflation continues to rise
Rishi Sunak unveiled a ‘mini budget’ that preserved most of the £50 billion public finance windfall and erred on the side of caution—in light of the worsening economic outlook. UK inflation hit a 30-year high in February, putting pressure on the Bank of England to continue raising interest rates. The consumer price index rose an annual rate of 6.2% driven higher mainly by soaring household energy bills and petrol prices.