Global equities posted mixed performance for the week. AI-related stocks drove most of the gains across the US and Japan, while European equities were pressured as the Strait of Hormuz remained largely closed.

 

Last week’s performance – major stock markets 

 

S&P 500	0.55%
Nikkei 225	2.12%
CSI 300	0.86%
Euro Stoxx 50	-2.88%
FTSE 100	-2.7%

 

Commentary

 

US: Equities rally to record highs on AI strength and positive earnings reports
US equity markets finished the week higher overall, with several indices reaching record highs despite ongoing uncertainty surrounding tensions between the US and Iran. Gains were led by the Nasdaq, supported by continued strength in AI related stocks and generally positive corporate earnings. Approximately 20% of S&P 500 reported earnings through the week, with 84% beating consensus expectations, according to FactSet data. Markets started cautiously after a strong rally but rebounded midweek following an extension of the ceasefire, even as geopolitical risks remained elevated. Economic data was broadly supportive, with retail sales rising 1.7% in March, the strongest monthly increase since early 2023, boosted by higher fuel prices and resilient underlying demand. However, consumer sentiment weakened, with the University of Michigan index falling further as inflation expectations rose sharply.

Japan: Mixed performance in Japan as inflation hits 1.8% year on year
Japanese equity markets delivered mixed returns, with the Nikkei rising 2.1% while the broader TOPIX index fell 1.2%. Technology and AI related stocks continued to support the Nikkei, pushing the index to fresh record highs. Inflation picked up in March, with core consumer prices rising to 1.8% year on year, driven mainly by higher energy costs. This has increased uncertainty around the Bank of Japan’s next policy move. Markets now expect a cautious wait and see approach at the April meeting. The yen weakened against the US dollar, renewing speculation around potential currency intervention.

China: Interest rates on hold implies confidence in the current growth outlook  
Mainland Chinese equities were broadly stable, consolidating gains after stronger than expected economic data the previous week. The CSI 300 and Shanghai Composite posted modest advances, while Hong Kong equities underperformed. The People’s Bank of China left interest rates unchanged for an eleventh consecutive month, signalling confidence in the current growth trajectory. First quarter GDP growth of 5% has reduced pressure for immediate stimulus. President Xi called for an immediate ceasefire in the Middle East and the reopening of the Strait of Hormuz. In corporate news, AI firm DeepSeek unveiled preview versions of its latest models, highlighting ongoing innovation in China’s technology sector.

Europe: stocks fall as geopolitical tensions weigh on sentiment

European equities fell sharply over the week, as geopolitical risks weighed heavily on sentiment. Defensive sectors such as utilities and telecoms outperformed as the Strait of Hormuz remained largely closed and negotiations between the US and Iran stalled. Losses were broad based, with Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB all falling by more than 2%. German business confidence weakened further, with the Ifo index (a leading indicator of economic activity in Germany) dropping to its lowest level since the pandemic. Manufacturing, trade and construction were among the weakest sectors. In France, consumer confidence fell sharply, marking its steepest decline since the start of the war in Ukraine.

UK: Consumer confidence falls to the lowest level since October 2023
UK equities declined over the week, with the FTSE 100 falling 2.7%, in line with broader European weakness. Labour market data was mixed, with the unemployment rate unexpectedly falling to 4.9% (better-than-expected), although this partly reflected lower labour force participation. Retail sales surprised to the upside, rising 0.7% month on month in March, supported by higher fuel purchases and stronger non-food spending. Despite this, consumer sentiment deteriorated sharply. The GfK Consumer Confidence Index fell to -25 in April, the lowest level since October 2023. The data highlights ongoing pressure on household confidence despite resilient spending.