Market Update – 24th April 2024.

Markets rallied this week as a busy week of earnings reports got underway and investors look to a full week of key economic data.

In US news, composite PMI data for April indicated that the economy’s private sector is still in expansion territory, albeit running at slightly a slower pace. The composite figure for March fell to 50.9 from 52.1 the month before. More modest increases in activity than have been documented of late were found in respect to both the manufacturing and services sectors, with rates of growth easing to three- and five-month lows. Lower price pressures are considered to be a major factor underpinning April’s marginal decline, caused by a cooling of demand and cuts made to employment numbers in the labour market as the private sector continues to adjust to complex business environments. In reaction, markets held firm on their hope for a series of two rate cuts by the Fed in 2024, with the idea – of course – being that a dip in economic momentum may spur policymakers to again look to ease restrictive policy.

PMI for the UK was also released on Tuesday, showing that the region has enjoyed the heartiest period of business growth since May 2023. The PMI composite index for the UK came in at 54.0 in April from March’s 52.8, surpassing expectations (even while a breakdown of the figure shows the manufacturing sector entered into contraction). PMI data is one key economic indicator the Bank of England takes into consideration when making decisions on policy. Any surge in growth increases the likelihood that businesses will raise prices to keep pace with their rising costs and therefore may result in complicating policymakers’ decisions to cut interest rates this year.

Chinese markets also surged this week following news that regulators will implement numerous market reforms that are set to put Hong Kong on the map as an international finance centre. The China Securities Regulatory Commission reported that it will expand the Stock Connect cross-border investment scheme and will facilitate Hong Kong listings of some of China’s biggest business players.

Still to come this week we have US GDP and PCE data and Japan’s CPI and interest rate decision.

Nicola Tune, Portfolio Specialist 

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