Highlights
Major U.S. stock indexes ended the shortened and highly volatile week in positive territory, helped by tentative signs that tensions in the Middle East might be easing. U.S. markets were closed on Friday for the Good Friday holiday. The Nasdaq Composite posted the strongest performance, surging 3.95% and recording its best weekly gain since November, while the S&P 500 and Dow Jones Industrial Average also rose notably by 3.36% and 2.98% respectively. Smaller-company indexes delivered solid gains as well. Stocks were initially weak on Monday but surged on Tuesday and Wednesday after President Donald Trump signalled that the U.S. might be more open to reducing its military role in Iran. However, market confidence faded later in the week after Trump’s Wednesday night remarks failed to provide a firm timeline for easing tensions. That uncertainty pushed oil prices higher and pressured stocks early Thursday, although markets recovered enough by the close to finish the week with gains. Employment-related reports painted a picture of a strong U.S. labour market, reinforcing expectations of a higher-for-longer stance from the Federal Reserve. March nonfarm payrolls rose by 178,000, the strongest increase since late 2024, while unemployment unexpectedly fell to 4.3%, partly due to lower labour force participation—signalling a stabilizing labour market. Outside the labour market, consumer confidence rose slightly in March despite concerns about higher costs tied to tariffs and the conflict in the Middle East. Meanwhile, U.S. manufacturing expanded for a third straight month in March, according to the Institute for Supply Management. Still, employment in the sector continued to contract for the 30th consecutive month, and price pressures climbed to their highest level since June 2022. Across the Atlantic, European stocks also joined in the rally, with the pan-European STOXX 600 adding 3.77% in the week and notching a second consecutive week of gains. Investor sentiment improved as hopes grew that the Middle East conflict might prove shorter and less damaging than initially feared. On the data front, inflation in the eurozone accelerated to 2.5% in March from 1.9% in February, marking the fastest pace since January 2025. The main driver was a sharp 4.9% rise in energy prices. By contrast, inflation moderated in services, non-energy manufactured goods, and food-related categories. In Switzerland, retail sales remained positive, rising 0.9% year over year in February. Non-food sales were especially strong, while food, beverage, and tobacco sales declined. Meanwhile, in Asia, Japanese equities fell over the week through Thursday, with the Nikkei 225 down 0.47% and the broader TOPIX falling 0.12%. Because Japan depends heavily on Middle Eastern oil, rising energy prices remain a major concern for the economy. Many investors increasingly believed the Bank of Japan could raise interest rates at its April meeting, partly due to concerns that higher oil prices may push inflation upward. Chinese stock markets were mixed through Thursday, as investors weighed signs of improving domestic economic activity against ongoing external risks. The CSI 300 Index slipped 0.53%, while the Shanghai Composite Index edged up 0.14%.
Data Highlights
USD Nonfarm Payrolls (Mar) rose from -133K to 178K while consensus only priced an increase to 60K. USD Non-Farm Payrolls Private (Mar) rose from -129K to 186K, consensus only priced in an increase to 70K. USD Unemployment Rate (Mar) dropped -10bps, from 4.4% to 4.3%, against a flat expectation. USD ISM Manufacturing PMI (Mar) rose 57bps, from 52.4 to 52.7, +18bps more than the 52.5 pencilled in. EUR Inflation Rate YoY (Mar) rose +60bps, from 1.9% to 2.5%, -10bps less than the 2.6% that was expected while EUR Core Inflation Rate YoY (Mar) dropped -10bps, from 2.4% to 2.3%, -10bps less than the flat expectations. EUR Unemployment Rate (Feb) rose +10bps, from 6.1% to 6.2%, against expectations to remain unchanged. CHF Inflation Rate YoY (Mar) rose 20bps, from 0.1% to 0.3%, -20bps less than the 0.5% consensus. JPY Unemployment Rate (Feb) dropped -10bps, from 2.7% to 2.6%, -10bps less than the flat expectation.
Week Ahead
EUR PPI YoY (Feb), CHF Unemployment Rate (Mar) – Wednesday | USD PCE Price Index YoY (Feb) – Thursday | CAD Unemployment Rate (Mar), USD Inflation Rate YoY (Mar) – Friday
