What to expect this week?
April 24, 2023
TPP Weekend Round Up: A fairly quiet week.
European stocks advanced a little on Friday to finish the week slightly up.
Lukewarm first-quarter results from companies in all regions heightened investors’ concerns of slowing economic growth.
Europe’s region-wide Stoxx 600 traded between gains and losses but finished 0.34% up, Germany’s Dax added 0.54%, per cent and France’s CAC 40 added 0.51 per cent.
London’s FTSE 100 rose 0.15 per cent meaning the index was up a little over half a per cent on the week.
Economic news in the UK faltered a bit this week.
CPI (inflation) came out higher than expected with the UK being one of the few countries in the world still posting double digit inflation figures. Earnings also came out higher than expected which is the main reason inflation is proving so sticky at the moment.
UK retail sales also fell more than expected in March which is a sign consumers are finally starting to tighten their purse strings. This should help the battle against inflation and we would expect CPI to begin its retreat shortly.
With the Federal Reserve’s next interest rate decision fast approaching, investors are on the lookout for signs of easing demand, lower orders and pressure on companies’ margins, as fears of a recession have risen since the collapse of three midsized lenders in the US last month.
Over what was a fairly quiet week without much movement in any direction, Eurozone business activity expanded faster than expected, driven by buoyant demand, easing price pressures and rapid jobs growth, as the bloc’s rebound from last year’s energy shock gained momentum.
The HCOB flash eurozone composite purchasing managers’ index, a measure of activity in manufacturing and services, in April rose for the sixth consecutive month to an 11-month high of 54.4, from 53.7 in the previous month. The result was above the flat reading expected by economists polled by Reuters.
The survey compiled by S&P Global indicated the economy is expanding at a faster pace than expected, which is likely to push the European Central Bank to raise interest rates when it meets on May 4.
Over in the US, the benchmark S&P 500 and the tech-heavy Nasdaq Composite each inched 0.1 per cent higher on Friday. The S&P 500 slipped 0.1 per cent over the week, while the Nasdaq Composite fell 0.4 per cent over the past five days.
The moves came amid lukewarm results earlier in the week from Tesla and AT&T, and a warning about the health of the US consumer from American Express. Shares in Procter & Gamble rose 3.5 per cent as its sales received a boost from higher prices across the portfolio of consumer products.
Aside from the steady stream of companies’ first-quarter results, investors are growing increasingly nervous about the still-remote possibility that the US will default on its debt obligations later this year.
“The Democrats and Republicans seem far apart and investors suspect we will need to see a lot more market stress before adults enter the room,” said Chris Turner, global head of markets at ING, noting that the price to insure US government debt against the risk of default this week hit a recent high. He added that weaker tax receipts could bring forward the dates when parts of the US government could begin to shut down.
The yield on two-year Treasuries increased to 4.18 per cent, while the yield on the benchmark 10-year note inched up to 3.57 per cent. Yields move inversely to prices. Concerns over growth mean the Federal Reserve is widely tipped to raise rates for the last time by a quarter percentage point when it next meets in early May, though investors are split on when the US central bank might begin to cut borrowing costs.
US inflation eased last month to its lowest level in nearly two years. Cleveland Federal Reserve president Loretta Mester said on Thursday that she expected further tightening of monetary policy.
In Asia, Hong Kong’s Hang Seng index posted its largest daily drop since late February, falling 1.5 per cent, with all sectors in negative territory. The Hang Seng tech index fell 3.1 per cent, with shares in Alibaba down 4.1 per cent. Chip stocks also dropped, with Taiwan Semiconductor Manufacturing Company down 5.5 per cent.
China’s CSI 300 gave up 2 per cent for its biggest daily slide since October, extending a decline that has taken hold even after the release of stronger than expected Chinese growth figures on Tuesday.
The current TPP market bias:
The majority of our traders have just completed an excellent Q1, in what was a very challenging trading climate.
It seems that the majority of the ‘buy or flats’ and the ‘active’ strategies timed many of the short/mid term moves fantastically well.
As of right now- our overall bias is one of a SELL variety. If markets retrace a touch from here- we’ll be very well positioned to take advantage.
One thing is for sure, our traders will be looking to start this quarter like they ended the last one.
If you have an underperforming portfolio or are sitting in cash waiting for an opportunity- contact our team for a FREE consultation.
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