Market Update

This week's economic indicators struck a balanced tone, reminiscent of Goldilocks' just-right porridge — signifying that while economic growth is moderating, it's not plummeting.
From our perspective, these trends imply that central banks might ease their rigorous pace of interest rate hikes. Furthermore, there's a possibility they could consider lowering the interest rates by the year-end, which bodes well for global stocks.
Take, for instance, the ISM manufacturing data released on 3 April 2023: the ISM services index didn't meet market expectations. Although it remains above the 50 threshold (indicating growth), the March reading of 51.2 is a dip from February's 55.1 and was lower than the projected 54.4. Delving into the specifics, there was a noticeable decline in new orders from 62.6 to 52.2. However, the silver lining includes the employment figure falling to 51.3 from 54 and the prices paid dwindling to 59.5 from 65.6 — the least since July 2020. These patterns hint at a relaxing US job market and diminishing inflationary tensions.
Moreover, the US employment report, released on 7 April 2023 when the US markets remained closed, echoed the same sentiment. Although the non-farm payrolls for March matched predictions, growing at 236,000, the labor force participation rate (representing the proportion of the population working or actively seeking employment) rose to 62.6%. Additionally, there was a continued slackening in wage growth, with March's annual rate of 4.2% being the softest since June 2021.