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WEEKLY ROUND-UP Thru APR 26th 2024; “Big Dollars Chasing AI”

Markets continue to see buyers step in with moves lower in US Indexes. How long will this last? Get my take in this week’s round-up.


This past week major indexes snapped a string of three weekly losses as investors responded to Q1 Earnings. Analysts were expecting overall earnings for the S&P to have increased 3.7% in the first quarter relative to the year before, with both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises above their 10-year averages.

S&P Global reported that its gauge of U.S. manufacturing activity fell back into contraction territory in April, at 49.9, (Est. was 52.0) while S&P’s services sector activity, also missed expectations, at 50.9 versus 52.0. US Q1 GDP came in at an annualized rate of 1.6%, well below estimates of around 2.5%, the slowest pace of growth in nearly two years. A sharp slowdown in government spending and a widening trade deficit were partly to blame, but consumers also continued to rein in spending, particularly on goods. In addition, we saw that Personal Consumption Expenditures (PCE) index rose at an annualized rate of 3.7% in Q1, more than expected and well above both the fourth quarter’s 1.7% increase and the Federal Reserve’s 2% long-term inflation target. ON Friday we saw that Core PCE inflation continued to decline on an annual basis in March, if ever so slightly, falling to 2.82% from 2.84% in February, still stubbornly high.

The yield on the benchmark 10-year U.S. Treasury note decreased somewhat following the release of Friday’s PCE data but still ended the week near its highest level in almost six months.

In Europe, numerous ECB policymakers have signaled that they expect to lower interest rates in June, barring economic shocks. Business activity in the eurozone grew at the fastest pace in nearly a year in April, with the Eurozone Composite Purchasing Managers’ Index (PMI), coming in at 51.4, up from 50.3 in March. A consensus forecast had called for PMI of 50.7. Germany’s PMI services activity increased and a decline in manufacturing eased. Overall business sentiment improved for a third consecutive month, and the government increased its forecast for economic growth this year to 0.3% from 0.2%. And business activity in the UK grew at the fastest pace in almost a year, with the composite PMI rising to 54.0 from 52.8 in March.

Buoyed by historic yen weakness, Japan’s stock markets gained over the week. The BOJ refrained from making changes to its monetary policy at its April meeting, which was perceived as broadly dovish by investors. BoJ Governor Ueda hinted that confidence to raise interest rates further is set to increase in the second half of this year, however. In the fixed income markets, the yield on the 10-year Japanese government bond rose to 0.91% from the prior week’s 0.84%. The yen weakened to about JPY 156.8 against the USD, from about 154.6 at the end of the previous week. Japan’s composite PMI rose to 52.6 from 51.7 in March while the pace of hiring picked up across the private sector, as business confidence remained positive.

China’s economy is expected to grow 4.8% this year, up from a median forecast of 4.6% last month, according to 15 economists surveyed by Bloomberg. China’s gross domestic product grew an above-consensus 5.3% in the first quarter from a year earlier, accelerating slightly from the 5.2% year-over-year expansion in the fourth quarter of 2023.

Enjoy this week’s round-up;

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