Markets in a minute 2nd April 2024

Last week, global equity markets broadly moved higher, with the S&P500 and Germany's DAX index both hitting new all-time highs, as expected interest rate cuts and good economic data supported the asset class.

US economic data continued to suggest robust business activity and consumer sentiment in Q1. February durable goods orders rose by double the rate expected. Consumer sentiment was also unexpectedly strong, suggesting that consumption could remain healthy. The University of Michigan consumer sentiment index for March rose to the highest level since July 2021.

Meanwhile, consumer and business sentiment in the Eurozone showed continued improvement in the March survey by the European Commission. Consumers expect better economic and financial conditions than in February, which could support consumption going forward. Confidence in manufacturing and services sectors rose, which could support business activity in the near term.

Central bank speakers from the ECB continued to suggest that rate cuts would be forthcoming in the first half of 2024, while the Fed cautioned around cutting rates too soon.

Bond yields fell (bond prices rise as bond yields fall) last week amid increasing expectations of a reduction in interest rates in June from the Fed and the ECB.

This week, focus is likely to be on Eurozone inflation data (tomorrow) and retail sales (Friday), as well as the US employment report (Friday). This, combined with speeches from various central bankers, should give more information to assess when and by how much rates will likely be reduced in 2024.