Global Equity Markets Dangle on Geopolitical Risk
Global equity markets closed mostly lower, with broad declines across the United States and Europe weighing on overall sentiment amidst unsettled geopolitical tensions.
In the U.S., major indices retreated, with the Dow Jones Industrial Average and S&P 500 both falling 0.4%, while the NASDAQ Composite declined 0.9%, reflecting weakness in growth and technology stocks.
European markets also edged lower, as the FTSE 100 slipped 0.2% and Germany’s DAX declined 0.2%, indicating subdued investor sentiment.
In Asia, performance was mixed, with the Nikkei 225 gaining 0.9%, standing out as the only major advancer, while China’s Shanghai Composite fell 0.5%, reflecting cautious regional sentiment.
Sentiment was weighed down by the lack of a permanent resolution to the US war with Iran and by the failure to secure the reopening of trade routes, despite earlier, but short-lived, announcements of trade flow resumptions by Donald Trump.
The Middle East’s uncertainties, elevated crude oil prices, and the reignition of domestic inflation weighed on sentiment as Brent crude returned above $100.0/bbl. Consequently, the MSCI World Equity Index dipped 0.3% w/w.
Despite hitting record highs this week, US equities closed unevenly, with the S&P 500 indices trading flat while Nasdaq gained 0.5%. During the week, the Labour Department reported that the number of initial jobless claims for the week ended April 18th rose by 6,000 from the prior week to a seasonally adjusted 214,000.
The unemployment benefit filings, although higher than 212,000 forecast by economists, suggested that the impact of the US-Iran war has been mild on the job market, with the latest data not showing a significant deviation from the trend.
Meanwhile, European markets remained sensitive to rising oil prices, which added to bearish sentiment as investors digested the recent inflation report showing a two-year high of 2.6% in March (February: 1.9%), driven largely by a 5.1% surge in energy prices.
As such, France’s CAC 40 and Germany’s Xetra Dax indices shed 3.0% and 2.2% week on week. Similarly, the UK’s FTSE All-share index slumped 2.4% w/w with inflation concerns firming up as March’s print worsened to 3.3% from 3.0% in February, further adrift from the Bank of England’s 2.0% target due to energy cost spikes.
Japan’s Nikkei 225 index advanced 2.1% as investors positioned in semiconductors and AI-related tickers ahead of earnings announcements. In contrast, Hong Kong’s Hang Seng index closed 0.7% down.
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