Market Update

Global equity markets experienced a welcome return to stability this week, as concerns over the banking sector further subsided. Evidently, equity markets concluded the week with notable gains, as reflected in the provided table.
The decline in inflation rates also played a role in this upbeat mood.
In the US, the PCE price index, the Fed's favored gauge for inflation, displayed a quicker-than-anticipated drop in February, landing at 5.0% from January's 5.3% (initially reported as 5.4%). This indicates a steady decline since its peak in June at 7.0%.
The core PCE inflation for February was also marginally below expectations at 4.6%, attributed to a 0.3% month-on-month rise, compared to the predicted 0.4%. The January figure was revised downward too, from 0.6% to 0.5%.
Coupled with the University of Michigan’s one-year inflation expectations, which plummeted to its lowest since April 2021, it reinforces our belief that the Fed's current tightening phase is almost done. Moreover, there's a solid chance of a rate cut in the US before year-end, a move likely to boost global equities further.
The Eurozone mirrored a similar trend. The CPI inflation for March was below the anticipated figures, with the primary reading sliding from 8.5% in February to 6.9% in March, against the forecasted 7.1%. While the core CPI did edge up from 5.6% to 5.7%, it was within expectations. Given these statistics, we anticipate the ECB might consider a gentler rate hike, possibly around 0.25%, in their upcoming meeting on 4 May 2023.