Company / Analytics

Week 12 in Brief

North America

How did the major indices perform? On Friday:

• The S&P 500 rose 0.56%,
• The Dow Jones Industrial Average gained 132.28 points, or 0.41%, closing at 32,237.53.
• The Nasdaq composite rose 0.3%

For the week:

• The S&P 500 gained 1.4%
• The Dow gained 0.4%
• The Nasdaq is up 1.6%

What drove the U.S. market?

• The Fed hiked rates by a quarter-point and hinted that its rate-hiking campaign may be ending soon, with Fed Chair Jerome Powell noting that credit conditions have tightened, which could put pressure on the economy.
• Deutsche Bank’s US-listed shares fell by 7% earlier in the day, triggering a selloff, but the bank closed 3.11% lower on Friday, rebounding from its earlier losses.
• The major indexes all had a winning week, with the Dow gaining 0.4%, while the S&P 500 and Nasdaq gained 1.4% and 1.6%, respectively.
• Treasury Secretary Janet Yellen said regulators are prepared to take more action if needed to stabilize US banks.
• Even as the market fell in the previous session in apprehension that the Fed would continue to tackle inflation with an iron fist, comments from Fed Chair Jerome Powell helped calm down investors’ nerves.

How did the European markets perform?

• Despite fears that the banking crisis was spilling over to Deutsche Bank, regional bank stocks bounced back, with the SPDR S&P Regional Banking ETF gaining 3.01% during the trading session.
• The pan-European STOXX 600 index fell 1.4% but still posted a weekly gain supported by a sharp recovery earlier this week and up just 3.5% on a year-to-date basis.
• European Central Bank President Christine Lagarde tried to ease concerns, saying eurozone banks are resilient, and the ECB could provide liquidity if needed
• An S&P Global survey showed business activity across the eurozone unexpectedly accelerated this month as consumers splashed out on services, but weakening demand for manufactured goods deepened the downturn in the factory sector.

How did Asian markets perform?

• Chinese equities finished the year down 21.8%, slightly worse than the U.S. but following a very different path. Chinese equity markets were up 3.2% in the second quarter of 2022 when the U.S. was experiencing its largest quarterly loss for the year (-16.1%).
• Despite India seeing record net outflows of $16 billion from foreign investors through the year (equivalent to -0.5% of the aggregate market cap), domestic sentiment on equities remained strong and the equity market was up 3.0% in Indian rupee terms (though down 8.0% in U.S. dollar).
• Japan held firm to its yield curve control approach through most of the year, maintaining relatively flat equity market performance while seeing the yen drift as low as ¥150/$ vs. ¥115/$ at the start of 2022.
• In the smaller markets of Southeast Asia, there were also significant deviations in performance, with Indonesia and Thailand generating positive returns (in local currency and U.S. dollar terms), while Vietnamese equities lost more than 40% of their value.

Bonds and Commodities

• West Texas Intermediate had recovered to top $70 per barrel at the time of writing and was set for a weekly gain of more than 4%. However, WTI has lost about $3 per barrel on a monthly basis.
• Brent crude also looked set to end the week with an overall gain: the benchmark started the week at around $70 per barrel and has since climbed to over $76 per barrel, although Brent remains much lower than it was a month ago, at over $82 per barrel.
• The yield on the 10-year Treasury sank 12 basis points to 3.29%.
• Spot gold fell 0.8% to $1,977.01 per ounce by 2:34 p.m. EDT (1834 GMT), after it rose to $2,002.89 earlier in the session.
• U.S. gold futures slipped 0.6% to settle at $1,983.80.
• Silver eased 0.1% to $23.07, platinum fell 0.7% to $977.776, and palladium dropped 0.7% to $1,420.40.

Currencies

• The US dollar index was up 0.67% to $103.23.
• The yen has gained over 5.5% against the dollar.
• 0.9% against the dollar in the week
• The euro and sterling fell sharply against a strengthening dollar on Friday amid lingering nervousness over banks.
• Bitcoin dropped 1% in the past hour to $27,764, while Ether slipped 1.5%% to $1,764.

• Next week

  Investors are bracing for more banking sector volatility next week, following the collapse of Silicon Valley Bank and Signature Bank earlier this month, as well as sharp declines in shares of European giants Deutsche Bank and UBS on Friday. Upcoming US data on consumer confidence and inflation could sway markets, with a potential rebound in US bond yields putting pressure on tech and growth stocks.

The Fed raised rates by another quarter point on Wednesday but recast its outlook from a hawkish preoccupation with inflation to a more cautious stance, given market turmoil. Incoming Bank of Japan Governor Kazuo Ueda will be watching the latest Tokyo inflation data closely as he takes over in April. Expectations are high that he will master-mind a delicate unwinding of yield curve controls and negative interest rates during his tenure, but the economic recovery remains fragile, and Ueda is under pressure.