Market Commentary 8th April 2019 from Charlie Hancock

With positive economic news coming out of China, the banking giant HSBC, who have significant operations in the region, saw their share price rise by around 4.8% across the week. Housebuilders also had a strong week, despite some weakness on Friday after Halifax published data showing that house prices dipped during March. Taylor Wimpey’s share price rose by 4.1% across the week, with Persimmon shares rising by around 2.5%.

Data released on Friday showing that German industrial output rose in February provided a welcomed boost to European equities. Economic data for the region over the last few months has broadly been negative.

February’s data on US employment showing 20,000 new jobs were added was disappointing, but March’s data which was published on Friday showed a strong bounce back, with 196,000 jobs added during the month. This beat most estimates and markets received this as a signal that US economic growth is not slowing as much as previously thought.

With oil prices rising to 2019 highs, energy was the strongest sector in the S&P 500 index this week. Despite investment bank UBS cutting their target price for the stock, Boeing Co saw their share price rise amidst further clarity on a software issue which caused last month’s fatal Ethiopian Airlines crash.

Asian equities rallied on Monday after encouraging data was published showing that manufacturing activity in China is improving. This was received by investors as a sign that stimulus measures by the Chinese government are working. Positive comments from Trump suggesting that Washington and Beijing have found some common ground also provided a further mid-week boost to Asian equities.

This fall in yields was reversed later on in the week as demand for government debt fell. Investor sentiment was lifted as a result of positive economic data from the US, China and Europe, together with a report from the Financial Times suggesting substantial developments have been made in trade talks between the US and China.

With positive developments on global trade later in the week, risk appetite amongst investors increased further which caused capital to flow away from Bunds and into equities, helping yields on 10 year Bunds to rise above the 0% mark.

News that the US added 196,000 jobs in March, exceeding estimates of around 170,000, helped to push yields higher. Economists commented that this is likely to mean wage growth continues to accelerate, but inflationary risks have not increased significantly and so the Federal Reserve is likely to continue to maintain their ‘patient’ stance.

GBP / EUR – Current 1.1625 Previous 1.1686

Sterling fell by around 0.5% against both the US Dollar and the Euro this week. The Pound suffered as a result of parliament failing to make any substantial progress on Brexit, with Theresa May writing to EU leaders to request a further extension to the UK’s departure date causing further uncertainty.