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Weekly comment: Stock markets rally to new all-time highs

Date: 05 March 2024

3 minute read

The MSCI All Country World Index rose 0.8% last week, closing out February on the front foot as US, European and Japanese stock markets chalked up new record highs. In the absence of fresh macroeconomic news bond markets experienced no major moves although that could change this week with several key announcements. 

The US was at the forefront of the move higher in equities, gaining 1.0% on the week, 5.3% in February and 7.1% year-to-date. This marks the best return for the first two months of the calendar year since 2019. Tech stocks continued to outperform, adding 1.8% on the week to take 2024 returns to 8.6% and move benchmarks into record-high territory for the first time since 2022.

US inflation data continues to suggest that the battle against rising price pressures is being won, as the core personal consumption expenditures price index — believed to be the favoured metric of the Federal Reserve —came in at 2.8% annually, in line with expectations.

Economic data from the world’s largest economy was slightly softer on the whole and the US 10-year Treasury yield declined 7 basis points to end at 4.18%, up 30 basis points on the year. Friday’s release of the February jobs report will be keenly viewed ahead of the Fed’s March monetary policy decision. Going into the event futures markets expect a first interest rate cut in June.

UK stocks are still struggling to gain traction and join the global rally, as benchmarks slid 0.2% last week to take year-to-date returns back into negative territory. The underperformance of UK stocks in 2024 is becoming more apparent, as Europe ex UK added 0.2% to take year-to-date returns to 5.0%. This week’s UK Budget is expected to contain some personal tax cuts intended to lift the mood ahead of a forthcoming election but Jeremy Hunt, Britain’s chancellor, has little room for manoeuvre and will no doubt be mindful to avoid any risk of following in his predecessor’s footsteps.

The 10-year gilt yield increased 8 basis points last week to 4.11%, up 58 basis points in 2024. The pound remained little changed against the US dollar, closing at 1.27.        

OPEC+ extends production cuts

Saudi Arabia and Russia led the way among OPEC+ members extending by three months voluntary reductions in oil production in an attempt to shore up the price. For the last couple of years, a series of output cuts have been implemented by the cartel and Brent crude, an international benchmark, has risen 6% since the latest cuts were initially announced in November.

Saudi Arabia has been producing 1m barrels per day less since July as it looks to boost the oil price. Brent crude hit its highest level of the year last week, moving above US$84 a barrel but, despite geopolitical tensions, prices remain substantially below the US$100 a barrel mark seen as the level budgeted for funding the kingdom’s ambitious economic reform programme.  


Richard Carter

Head of Fixed Interest Research

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