ECB Meeting and US CPI Report to Drive Markets

Equities

Last week the FTSE 100 saw a decline of 0.8% as the  FTSE 250 dropped by similar 0.7%. Both indices, however, managed to recover from deeper losses following an unexpectedly strong US jobs report, suggesting optimism for a gentle economic deceleration in the States.

Mining giant Rio Tinto 2.4% as shareholders demanded greater transparency on environmental matters. In the retail sector, Ocado Group's shares fell almost 9%, continuing a downward trend after the announcement that Chairman Rick Haythornthwaite would be stepping down.

Across the Atlantic, the narrative around US stocks, particularly within the S&P 500, centred on valuations that have reached a peak not seen in about two years. The index has climbed more than 9% year-to-date, marking its strongest first-quarter performance since 2019. However, with the S&P 500 trading at approximately 20.7 times its estimated earnings for the next 12 months, there's growing pressure on companies to deliver exceptional results.

Notably, the earnings season is anticipated with keen interest, especially for major players like Delta Air Lines, BlackRock, and JPMorgan Chase, set to release their first-quarter results.

The US technology sector remains a focal point for investors, with companies like Nvidia showing a striking 78% increase in 2024, contrasting sharply with Tesla's shares dropping over 30% amid concerns over margins and demand. 

Forex & Commodities

The US dollar displayed modest gains in Asian markets following a significant US payroll announcement, though its progress was tempered by anticipation of forthcoming US inflation data and a rise in Treasury yields. The dollar index saw slight upward movement, primarily at the expense of the Swiss franc, Canadian dollar, and Japanese yen.

Friday’s US employment report, which exceeded expectations, has contributed to a stronger US economic outlook, potentially influencing the Federal Reserve's interest rate decisions.

Market watchers are now poised for the US consumer price index release and the European Central Bank's policy meeting, both of which could significantly impact currency valuations.

The upcoming Reserve Bank of New Zealand policy meeting is also drawing attention, especially given recent bets on a dovish stance due to weakening economic indicators, potentially affecting the New Zealand dollar's strength.

Meanwhile, gold prices have surged to record highs, marking a 16% increase since mid-February. Oil prices, conversely, have declined by more than 1% as tensions in the Middle East showed signs of easing, following Israel's troop withdrawals from southern Gaza and the initiation of ceasefire talks.