Bassanese Bites: Fed Ahead – April 29 2024
Global markets – week in review
Global equity markets rebounded last week after a few weeks of losses, thanks to easing Middle East tensions, generally upbeat Mag-7 earnings reports, and an inflation report that was no worse than feared.
Expectations for US rate cuts this year, however, continued to evaporate before our eyes. A Fed policy meeting looms large this week, which will keep interest rate concerns front and centre.
One of the key highlights last week was what did not happen – namely a further tit-for-tat exchange between Israel and Iran. This is encouraging, suggesting that neither side sees any upside in escalating tensions further. Oil prices have consolidated in recent weeks.
Also positive were good earnings reports from Microsoft and Alphabet, leading to unsurprising share price improvement. Of the other two Mag-7 that reported, fortunes varied. Tesla badly missed earnings expectations, but managed to leave investors upbeat by doubling down on plans to launch a cheaper car. Meta, by contrast, did beat earnings expectations – though its share price sank after it warned of further costly investment in AI projects. The fact that Tesla shares had been sold down in the weeks ahead of the earnings announcement, while Meta’s stock has been bid up, likely contributed to their disparate post-earnings performance.
The US headline and core consumption price deflators both rose 0.3% in March – in line with market expectations. These results did, however, result in small upticks in the annual rates of inflation for both measures – a trend we hope won’t continue!
