The primary market indices mostly declined during a week shortened by holidays, with traders observing light and fluctuating trading activity. American markets, along with the majority of markets in the Americas, were closed on Friday due to Good Friday, while Passover began on Wednesday evening. Traders pointed out that investors seemed to take a break following the previous week’s end-of-quarter portfolio adjustments by some institutional investors, which took place before their quarterly public disclosures.
Since markets were closed on Friday, investors could not respond to the Labor Department’s nonfarm payrolls report for March, but other crucial economic releases appeared to influence sentiment. On Monday, the Institute for Supply Management’s (ISM) March factory activity index dropped to its lowest point in nearly three years, reversing a slight increase in February. The ISM’s services sector index, released two days later, showed that the services sector was still growing, but at a significantly slower pace than anticipated.
Recession concerns intensified, and hopes for lower interest rates increased when the Labor Department announced on Tuesday that job openings in February fell more than expected, dropping to 9.9 million, a level last seen in May 2021. The number of people quitting their jobs increased from 3.9 million to 4.0 million. Some economists argue that the number of voluntary job departures is a more reliable indicator of the overall labor market health.
Analysts observed that pessimistic statements from a Federal Reserve official and a prominent bank executive also dampened sentiment. Cleveland Fed President Loretta Mester said at an economic conference that she anticipated the federal funds rate to exceed 5% and remain there, while JPMorgan Chase Chairman and CEO Jamie Dimon cautioned in a letter to shareholders that “the [banking] crisis is not yet over” and that “there will be repercussions from it for years to come.”
European shares increased as fears of a banking crisis subsided. In local currency terms, the pan-European STOXX Europe 600 Index ended the five days through April 6 with a 0.90% gain. Major stock indexes exhibited mixed results.
European Central Bank (ECB) President Christine Lagarde, Vice President Luis de Guindos, and Chief Economist Philip Lane indicated that inflationary pressures necessitate additional interest rate increases. Several other policymakers, including Bank of France Governor François Villeroy de Galhau, Bank of Lithuania Governor Gediminas Šimkus, and Bank of Greece Governor Yannis Stournaras, concurred that rates might rise but also stated that they believed rates were nearing their peak.
For the first time since 2015, European Union house prices fell in the fourth quarter of the previous year, decreasing by a record amount, according to Eurostat data. House prices fell by 1.5% sequentially as higher interest rates reduced housing demand. Concurrently, eurozone producer prices fell for the fifth consecutive month and more than expected in February, primarily due to declining energy prices.
Bank of England (BoE) Chief Economist Huw Pill indicated that policymakers face a tight decision on whether to raise interest rates for the 12th consecutive time in May, signaling that monetary policy tightening in the UK may be nearing its end. Speaking in Geneva, he stated, “On balance, the onus remains on ensuring enough monetary tightening is delivered to see the job through and sustainably return inflation to target.”
Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here
In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Financial Services Contracts Regime, which allows EEA-based firms to operate in the UK for a limited period to carry on activities which are necessary for the performance of pre-existing contracts, are available on the Financial Conduct Authority’s website.
Copyright 2020 Lawsons Equity Ltd | Designed by Echo
Disclaimer: The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice. Similarly, any views or options expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Lawsons Equity Limited has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Lawsons Equity Limited does not accept liability for losses suffered by persons as a result of information, views of opinions appearing on this website. This website is owned and operated by Lawsons Equity Limited.