Despite the IMF’s doom and gloom message this week, regarding the state of the global economy, major global equity markets had a pretty good week. The S&P 500 finished the week up 1.6%, back to the top of its recent trading range. The FTSE 100 closed the week up 2.25%, the Eurofirst 300 index fared better up 3.5% and the Nikkei up 6.49%. Once again it was a mixed week for global macro data, China provided some more positive news as import export data beat expectations. On Friday China reported Q1 GDP growth of 6.7%, almost in line with expectations, however retail sales and industrial production for March both beat expectations. As seems the case most weeks it was a mixed bag of data from the US economy. Retail sales and the Michigan consumer were disappointing; inflation was in line with expectations for the month of March. The New York Empire State Manufacturing data came in better than expected, however industrial and manufacturing production for March missed estimates. We also had the banking sector report earnings, which overall so far have been no worse than feared, and in the case of JPMorgan slightly better. As one would have expected with the rally in equity markets the Vix fell over the week closing back below 14, again to the bottom end of recent trading range.
US treasury yields rose slightly at the start of the week, but as the week progressed and bond investors digested the IMF cautious tone, yields fell back to close the week at 1.72%. Yields on UK gilts hardly moved after the release of the monthly minutes from the last meeting of the Bank of England’s monetary meeting, two-year gilt yields are currently 0.43% with the ten-year at 1.41%. Completing the picture, the oil price marked time, holding recent gains as Brent Crude remains around $42 a barrel ahead of the OPEC meeting in Doha. Overall commodities had a decent week as the Bloomberg commodity index rose about 2.5%.
The weeks ahead will again become dominated by company earnings reports for the first quarter. This coming week we get several US blue chip names reporting, including Alphabet, Intel, IBM, Yum Brands Coca Cola and Starbucks.
On the macro front, the US is dominated by housing data, on Tuesday housing starts and building permits for March. On Wednesday existing home sales. On Friday we get the Markit flash Purchasing Managers Index reading for April. Forecasts are for a small pickup from the previous month. As for the UK, George Osborne will once again put the case forward for remaining in Europe in a speech on Tuesday. Mark Carney will also speak on that day. As for Europe the focus will be Thursday at the monthly rate setting meeting followed by the press conference.