Global Markets Respond to Strong US Economic Data and Persistent Inflation in Europe

The economic data released in the US last week indicated a strong and robust economy. Durable goods orders, new home sales, GDP, and weekly unemployment claims all showed positive signs, suggesting that the economy is progressing at a brisk pace.

Across the Atlantic, inflation readings across European countries revealed that inflation remained stubbornly high and rather steady.

Equity Markets Rally on Positive Economic News

Equity markets had a very strong week globally. The performance of stock markets across the US, Europe, and Asia ranged from +2% to +3.5%. They are now solidly anchored in the overbought territory.

Fixed Income Markets React to Interest Rate Expectations

Fixed income markets, on the other hand, reacted as a counterweight throughout Thursday and Friday. Yields continued to slowly rise, repricing the expected path of interest rates. Speakers of both the Federal Reserve (Fed) and the European Central Bank (ECB) reiterated the need to further hike reference rates in response to the persistently high inflation.

Commodity Markets Struggle Amid Growth Uncertainties

Commodity markets – the ambivalent asset class – exhibited mixed performance. The lack of strong growth in Asia, particularly in China, coupled with uncertainties surrounding GDP projections for Europe and the US in 2024, has shown commodities to be underperforming (and therefore, unappealing) compared to equities.