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The FTSE 100 rose 3.09% last week to 8,139.83 points, while the FTSE 250 saw an uptick of 2.23% to 19,824.16 points.
Investor sentiment was also bolstered by the performance of the heavyweight mining sector as commodity prices experienced an upward trend.
In currency markets, sterling was last down 0.34% against the dollar, trading at $1.2471, while it gained 0.06% on the euro to close at €1.1669.
The bidding bonanza for UK-listed firms goes on, and this is acting as a constant reminder to global investors that, even with the FTSE 100 at a record high, UK stocks look cheap compared to the rest of the developed markets, particularly the US and France.
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. Input costs increased at the strongest pace in 11 months, but output prices declined, suggesting that weakening demand is squeezing business margins.
In Europe
The STOXX Europe 600 Index snapped a three-week losing streak and ended 1.74% higher. An easing of Middle East tensions and some encouraging corporate earnings results helped to boost sentiment.
Most major European stock indexes also advanced. Germany’s DAX gained 2.39%, France’s CAC 40 Index added 0.60%, and Italy’s FTSE MIB climbed 0.97%.
European government bond yields hit their highest levels this year. Strong US economic data increased expectations that the Federal Reserve would keep interest rates higher for longer, which could force other major central banks to follow suit. The yield on the benchmark 10-year German government bond briefly spiked above 2.6%.
Business activity in the eurozone grew at the fastest pace in nearly a year in April, driven by a recovery in the services industry, according to purchasing managers’ surveys compiled by S&P Global. A first estimate of the HCOB Eurozone Composite Purchasing Managers’ Index (PMI), which includes the services and manufacturing sectors, came in at 51.4, up from 50.3 in March. A consensus forecast had called for PMI of 50.7. Readings above 50 indicate expansion.
In the US
In the US The S&P 500 Index and most other major benchmarks managed to snap a string of three weekly losses as investors responded to the busiest week of the first-quarter earnings reporting season.
As of the end of the week, analysts polled by FactSet were expecting overall earnings for the S&P 500 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.
The technology-heavy Nasdaq Composite Index performed best rising 4.23%, helped in part by strength in Apple and a late rebound in chipmaker NVIDIA. Shares in Google parent Alphabet also surged late in the week following its announcement of better-than-expected first-quarter earnings along with the company’s first dividend payment.
Conversely, Facebook parent Meta Platforms fell sharply — at one point erasing nearly USD 200 billion in market value — after CEO Mark Zuckerberg announced plans to continue heavy spending on artificial intelligence and other new technologies.
Buoyed by historic yen weakness, Japan’s stock markets gained over the week, with both the Nikkei 225 Index and the broader TOPIX Index returning 2.3%.
The Bank of Japan (BoJ) refrained from making changes to its monetary policy at its April meeting, which was perceived as broadly dovish by investors. BoJ Governor Kazuo Ueda hinted that confidence to raise interest rates further is set to increase in the second half of this year. 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%.
In Asia
Chinese stocks rose as investors grew more optimistic about the economy. The Shanghai Composite Index gained 0.76%, while the blue-chip CSI 300 added 1.2%. In Hong Kong, the benchmark Hang Seng Index soared 8.8%, according to FactSet.
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.
However, economists downgraded their inflation forecasts as declining producer prices and a persistent property market slump remain a drag on the economy.
What to look out for this week
Earnings season continues and we’ll get results from major companies including Samsung, Santander, Volkswagen, Carlsberg, Glaxo, Reuters, Shell, Societe Generale, Domino’s, Berkshire Hathaway, Paramount, Amazon, Coca-Cola, AMD, McDonald’s, Eli Lilly and Apple.
Aside from earnings, it’s a busy economic data week as well. Tuesday is a GDP blast from France, Germany, Italy and the Euro Area as a whole. These are all expected to be fairly small numbers with Germany actually looking at negative growth for the quarter of -0.3%.
On Wednesday we’ll get the Fed’s latest interest rate decision but we aren’t expecting any surprises from that. The more interesting information will be interpreted during the press conference. With the recent inflation data all suggesting that inflation is on the rise rather than fall, our eyes and ears will be keen to get some clues as to just how concerned the Fed is with what they are calling ‘sticky’ inflation, but is surely now close to being a ‘resurgence’ of inflation.
Of course the trend may start to move downward again, but there is fear that it doesn’t with the US economy still remaining strong and the consumer still spending
Have a great week and good luck for your portfolio. If you would like more information on how TPP is building portfolios using strategies built by professional traders, please do get in touch.
We have passive strategies with a twist that track global markets at a rate of 1.5 to 2x the market. We have long/flat strategies that will buy in when the markets are strong and then take profit and sit on the sideline when they aren’t.
We also have active strategies that will look to make money regardless of market direction or climate. Most of these have enjoyed the recent sell-off due to a short position. Solid diversified portfolios have a mixture of all of these to build a robust, long-term, absolute investment.
