TECH IS BACK
Equity markets diverged last week. The S&P 500 and NASDAQ 100 set new record highs driven higher by encouraging earnings reports from Big Tech whilst European markets closed lower on growth and inflation fears.
Over the weekend, the US administration announced that it would not be sending representatives to Pakistan for negotiations with Iran and so, the standoff in the Strait of Hormuz looks set to continue as the conflict enters its second month.
It's a big week ahead for markets as Alphabet, Apple, Amazon, Microsoft and Meta report earnings and the US Federal Reserve, ECB, Bank of England, Bank of Japan and Bank of Canada all meet to decide on interest rates. Economic data is light but Eurozone GDP and inflation data will be watched.
The standoff in the Strait of Hormuz looks set to continue as the US blockades any ships that have docked at Iranian ports and Iran does the same to everyone else. President Trump announced that Jared Kusher and Steve Witkoff would not be travelling to Pakistan for talks. German officials halved their 2026 growth projections to 0.5% and trimmed their 2027 estimates from 1.3% to 0.9% while raising their inflation outlook to 2.7% as the conflict in the Middle East continues to raise costs for households and businesses. In the US, Big Tech returned with a bang as Intel seems to have turned it's business around after years of underwhelming performance. The stock notched its biggest one day gain since 1987 and finally surpassed its previous high which was set back in the heady days of 2000. The US Department of Justice dropped the case against Jerome Powell and the Federal reserve, paving the way for Kevin Warsh's appointment. Wash, at his Senate hearing last week pledged to maintain Fed independence whilst committing to pursuing reforms including changes to how the Fed measures inflation.
The S&P 500 finished the week up 0.55% (4.67% YTD) on the back of tech earnings whilst the STOXX 600 in Europe shed -2.54% in the week (3.12% YTD) led lower by growth and inflation fears in Germany.
Bond yields rose last week, (bond yields rise as bond prices fall) on both sides of the Atlantic. The 10-year US Treasury rose 8bps to settle at 4.33% while the German bund equivalent followed suit, rising by 5bps to 3.01%. Inflationary fears and the possible knock-on effects to central bank rates appear to be the main drivers.
- Mon 27th - EU Germany Consumer Confidence data
- Tue 28th - US Consumer Confidence * Bank of Japan rate decision
- Wed 29th - US Fed rate decision * EU German inflation data * Alphabet, Amazon, Meta & Microsoft earnings
- Thu 30th EU - ECB rate decision, GDP estimate * UK Bank of England rate decision * Apple earnings * Global PMI's
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.