Market Update – 10th April 2024.

The consumer confidence index for Japan came in hot on Tuesday at highs not seen since May 2019. Data from the Cabinet Office revealed that the index rose to 39.5 from a revised 39 in February. This also is the sixth consecutive month of rising confidence amongst the Japanese population. A more intricate reading of the survey showed that sentiment is improving particularly towards growth in income and durable goods purchases.

The survey also highlighted that consumers believe prices are due to keep rising in the near future, something echoed by Bank of Japan governor Ueda this week when he stated that inflation will likely continue to accelerate, albeit gradually. Ueda maintained that Japan’s current degree of monetary stimulus will remain as is for the time being until empirical data shows that wages have risen and subsequent service prices have grown in kind.

Reports from the British Retail Consortium this week indicated that the UK’s sales sector is returning – more positively – to a period of growth following hitting a two year low in February 2024. Easter coming early in the year meant that food sales enjoyed an uptick in April as shoppers prepared for the long bank holiday, even as other items such as garden furniture and clothing were ‘rained out’ by the wet March weather. A quarter-on-quarter comparison showed that shoppers spent 6.8% more on food items – a likely consequence of cooling inflation in recent months that has given consumers back some of their spending power and provided a welcome rebound to the recovery hopes of retailers and suppliers.

Markets have been fairly subdued this week with investors eyes firmly fixed on key US inflation data due out tomorrow. Forecasts show that inflation may be shown to have risen at a pace of 3.4% in March, which would be up from February’s 3.2% increase. On the lead up to the release, the Fed have emphasised that the policy rate is likely now at its peak, although they are in no hurry to reduce rates and are choosing instead to remain led by the data.

Finally, over in Ireland, industrial production grew by 3.7% in contrast to a 26.8% contraction in January.

Still to come this week we have the ECB’s interest rate decision, China’s CPI data, UK GDP and Fed minutes.

Nicola Tune, Portfolio Specialist

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