Written by Chris Ayton.

While President Joe Biden enjoyed himself revisiting his heritage in Ireland, equity markets were also in a good mood with the MSCI All Country World Index +1.2% over the week.  The UK equity market was even stronger, rising +1.9%.  With incremental interest rate rises still expected, fixed income securities were generally more subdued as the Bloomberg Global Aggregate Index dropped -0.6% in GBP hedged terms over the week, although high yield bonds performed considerably better.

UK GDP growth data was released that showed the strike-impacted economy flatlining over February, but an upward revision to January’s growth figure means the size of the UK economy has finally surpassed where it was in February 2020, prior to the Covid pandemic.  Sterling has also continued to be robust against the US Dollar, hitting a 10-month high of $1.2546 during the week, a level more than 20% above where it sat in the nadir of September last year.

In the US, better than expected Q1 earnings results from Citigroup, JP Morgan, and Wells Fargo eased some lingering concerns about the recent banking turmoil.  Despite some signs of a softening labour market, US consumer sentiment also surprised on the upside, reigniting expectations of a further rate hike from the Federal Reserve in May.

China was a rare weak spot for equities, with MSCI China dropping -0.4% over the week.  This was despite data showing export growth had surged 15% in March, driven by increasing sales of electric vehicles and their components as well as a surge in trade with Russia.  With exports still a key component of China’s economy, the data provided some renewed hope that China can achieve the Government’s 5% GDP growth target for 2023.

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