Weekly Insight April 9
The IMF raised its growth forecast and the Fed Chairman reiterated the accommodative stance, pushing global stock markets higher in the wake of the Easter holidays. Over the past 5 trading days ending Thursday, the Dow and S&P rose 1.58% and 3.13%, continued hitting new record highs, whilst the NASDAQ was boosted by the rebound in technology stocks, gaining 4.4% over the same period. The International Monetary Fund (IMF) revised its global economic growth forecast upwards, projecting the US economy to grow by 6.4% this year. The Federal Reserve's March meeting minutes showed that there is still a long way to go before tapering can take place. Powell's comments supported stock market performance as he downplayed the risk of runaway inflation and pledged to bring the US economy on its feet again. The market is expecting favourable economic headlines, including a 5.2% MoM rise in retail sales in March, a further rise in the University of Michigan Market Sentiment Index to 88.8 in April, and the NFIB Small and Medium Business Optimism Index to reach 98.0 in March, and the US will also release the March CPI and the Fed Beige Book next week.
European stocks continued the advance, with the UK, French, and German equities rising between 1.28% and 2.51% over the past 5 trading days ending Thursday. The minutes of the ECB meeting showed a sweeping consensus on the size of the PEPP under current conditions. President Christine Lagarde expects local economic activities to remain affected by the lockdown measures in the near term, but noted that the economy would gradually recover afterwards. On the economic data front, the Eurozone services PMI read 49.6 in March, higher than market expectations and the initial estimate. As for epidemic updates, the European Medicines Agency (EMA) concluded that blood clots are a very rare side effect of the AstraZeneca vaccine, after which several European countries announced suspending administration of the vaccine to people aged 60 or below. Next week, Germany will release the ZEW survey for April.
While the Hong Kong stock market followed global equities and rebounded, the mainland stock market remained relatively weak. The Hang Seng Index gained 1.51% over the past 5 trading days ending Thursday, while the CSI 300 Index showed little change over the same period. The IMF once again raised its forecast for China's economic growth to 8.4% this year and predicted that China will be the biggest driver of the global economy in the post-epidemic era. On the economic front, China's CPI rose by 0.4% YoY in March, while the PPI rose by 4.4% YoY, marking the largest increase in more than two and a half years, both reflecting the accelerating growth momentum. PBoC Governor Yi Gang said China's economy has been recovering steadily so far this year, and macroeconomic policies will remain stable. Next week, China will release GDP for 2021 Q1, as well as fixed investment, industrial production, and retail sales data for March.