Market Update

Several markets were closed on Easter Monday, and while the UK was abuzz with festive celebrations, many markets in countries that don't observe Easter as a national holiday remained open.
At the beginning of the week, China released its Q1 GDP figures, measuring a 4.8% growth compared to the same quarter last year, surpassing both the previous quarter and analysts' expectations. However, analysts anticipate a drop in the next quarter's reading due to ongoing COVID lockdowns in China, which are hindering business operations and spending for many individuals.
On the same day, the People's Bank of China announced its commitment to supporting industries affected by COVID outbreaks, utilizing its substantial reserves and various monetary policy tools. This move is expected to provide significant support to markets while lockdowns persist in the region.
Inflation in the Eurozone for March was reported at 7.4%, prompting Christine Lagarde, the President of the European Central Bank (ECB), to address this high figure at the IMF spring meeting later in the week. Lagarde not only condemned Russia's actions and expressed solidarity with Ukraine but also reiterated the key factors contributing to inflation, including supply chain constraints, rising energy prices due to the Ukraine conflict, and increased food costs driven by elevated transport and production expenses, partly influenced by the price of fertilizers affected by the war. She emphasized the importance of clear communication of the ECB's economic outlook and confirmed the central bank's commitment to data-driven and flexible decision-making.
Jay Powell, Chair of the US Federal Reserve (Fed), also attended the meeting and took a more hawkish stance. Powell announced his intention to raise interest rates by 50 basis points (0.5%) in May, ahead of the Fed's upcoming meeting. The Fed appears to be adopting a strategy of taking a confident step forward and then reassessing the situation. Despite the increase, interest rates remain historically low, and to approach levels seen in the past two decades, a rate hike of much larger magnitude would be required.
In other developments, Boris Johnson's visit to India towards the end of the week included discussions of a potential UK-India post-Brexit trade deal, which would be well-received by the markets. He acknowledged India as a rising power in Asia.
Looking ahead, the weekend will feature the French presidential election run-off vote in France, with Macron expected to win by a narrow margin. Notable data for the next week includes growth and inflation figures from the US and Europe.