Highlights
U.S. equities posted strong gains for a second consecutive week, supported by signs of easing tensions in the Middle East and a sharp decline in oil prices, which lifted investor sentiment. All major indexes rose more than 3% over the week, with the Nasdaq Composite leading the advance, up 4.45% while the S&P 500 added 3.56%. Within the S&P 500, energy was the only sector to decline, while consumer discretionary, communication services, and information technology stocks led the gains. Markets began cautiously as investors tracked escalating rhetoric between the U.S. and Iran, including concerns over energy infrastructure and shipping routes such as the Strait of Hormuz. Sentiment shifted midweek following reports of a two-week ceasefire framework and ongoing diplomatic talks, sparking a broad rally in risk assets. Oil prices, which had surged in prior weeks, dropped sharply—marking their steepest daily fall since 2020. Additional headlines suggesting possible negotiations involving Israel and Lebanon further supported equities, although uncertainty remained elevated. At the same time, optimism surrounding artificial intelligence also fuelled gains, particularly among large-cap technology and semiconductor companies, as investors focused on rising computing demand, upcoming model releases, and continued infrastructure investment. On the macroeconomic front, data showed that inflation picked up in March. The consumer price index rose 3.3% year over year, up from 2.4% in February and the fastest pace since May 2024, largely driven by higher gasoline prices. The Federal Reserve’s preferred measure, the core personal consumption expenditures index, edged down slightly to 3.0% year over year in February. Personal income declined 0.1% during the month after a prior increase. Meanwhile, U.S. economic growth estimates were revised lower. Fourth-quarter 2025 GDP growth was adjusted down to an annualized rate of 0.5% from 0.7%, mainly due to weaker investment. Moving across the Atlantic Pond, European stocks joined in the rally, with the STOXX Europe 600 Index rising 3.99% marking a 3-week streak of gains, supported by news of the U.S.–Iran ceasefire agreement. Major indexes across Germany, Italy, France, and the UK all posted gains, in the holiday-shortened week as markets were closed on Monday for Easter. However, economic concerns persisted. The European Union signalled that it may downgrade its 2026 growth outlook, warning of a potential stagflationary environment driven by slower growth and rising inflation linked to the conflict. In Asia, Japanese equities rebounded sharply, led by a relief rally in technology and export-oriented stocks following the ceasefire news. The Nikkei 225 surged over 7%, while the TOPIX also posted solid gains. However, despite falling oil prices, concerns about energy supply disruptions persisted. The government announced plans to release additional oil reserves to stabilize supply and limit the domestic impact of higher energy costs. Finally, Chinese markets advanced during the shortened trading week, supported by optimism over easing geopolitical tensions and improving producer price data. In a notable political development, President Xi Jinping hosted Taiwan opposition leader Cheng Li-wun in Beijing, emphasizing the goal of eventual unification. The meeting comes amid heightened cross-strait tensions and ahead of a planned visit by U.S. President Donald Trump to China.
Data Highlights
USD Inflation Rate YoY (Mar) rose +90bps, from 2.4% to 3.3%, in line with expectations. USD Core Inflation Rate YoY (Mar) rose +10bps, from 2.5% to 2.6%, 10bps less than the expected 2.7% landing. USD Core PCE Price Index YoY (Feb) rose +10bps, from 0.3% to 0.4%, in line with expectations. USD GDP Growth Rate QoQ (Q4) fell -390bps, from 4.4% to 0.5%, 20bps less than the expected 0.7%. CAD Unemployment Rate (Mar) stayed still at 6.7%, while consensus had wrongly priced a +10bps increase to 6.8%. EUR PPI YoY (Feb) fell -100bps, from -2% to -3%, in line with expectations. JPY PPI YoY (Mar) rose +50bps, from 2.1% to 2.6%, +20bps more than the expected 2.4%. CNY PPI YoY (Mar) rose +140bps, from -0.9% to 0.5%, +10bps more than the expected 0.4%. CNY Inflation Rate YoY (Mar) fell -30bps, from 1.3% to 1%, -20bps less than the expected 1.2% landing.
Week Ahead
CNY Imports YoY (Mar), CNY Exports YoY (Mar), USD PPI YoY (Mar), USD Core PPI YoY (Mar) – Tuesday | AUD Unemployment Rate (Mar), CNY Unemployment Rate (Mar), CNY GDP Growth Rate YoY (Q1), CNY GDP Growth Rate QoQ (Q1), GBP GDP YoY (Feb), EUR CPI (Mar), EUR Inflation Rate YoY (Mar), EUR Core Inflation Rate YoY (Mar), USD Initial Jobless Claims (Apr), USD Continuing Jobless Claims (Apr) – Thursday
