World Economic Forum in Davos Paints Grim Global Picture
Global equity markets continued their recovery last week, with countries like India, Hong Kong and Japan all rising over 3.0%. The S&P 500 index posted a second weekly gain after declining for seven consecutive weeks. The consumer discretionary and technology sectors which have performed the worst so far this year led the way higher.
The Consumer Staples sector came under pressure after several companies reported earnings that were negatively affected by inflation. China reported lower than expected industrial output and retail sales as Covid lockdowns took their toll on the economy.
So far, Q2 2022 is shaping to be a quarter where positive weeks are a rarity for market indexes. Even though the US Consumer Price Index printed 8.3% for April which is down from the 8.5% recorded in March, it's too early to say if inflation has peaked.
Over the last week, interest rates were the main focus of many markets as several central banks announced hikes to their benchmark interest rates. Every central bank attributed the rises to tackling the significant inflation affecting their economies and normalizing their respective monetary policies.
US stocks fell 3.19% last week after several notable companies delivered either disappointing results or lowered their guidance for the second quarter. Leading the downside was the consumer discretionary sector which was dragged down by its largest two components, Amazon ( NASDAQ: AMZN ) and Tesla ( NASDAQ:TSLA ). The S&P 500 index is now 14% below its highs, while the Nasdaq is down 23% and technically in a bear market.
While the majority of the U.S. market has been trading sideways for most of the week, some notable names experienced significant share price declines. Investors are still trying to estimate the effects of inflation as uncertainty increases across the board, and some companies' latest earnings reports are disappointing investors.
The U.S. Market finished 1.85% lower last week, as tech and telecom stocks took the brunt of the fall while energy stocks extended their gains by 1.1% for a total of 63% return from a year ago. While tech stocks have lost 3.5% over the last 12 months, the telecom and consumer discretionary stocks are the worst performers with both industries falling about 18% for the period.
US stocks traded lower last week (down 2.1%) after three weeks of gains. Growth stocks were the major losers as attention once again turned to rising interest rates.
After a turbulent 3 months, the 1st quarter of 2022 is finally behind us. The major U.S indices posted negative results for the period.
This past week marks 2 years since the S&P 500 dropped some 35% to reach its lows of 2,237 on March 23rd, 2020. Since then, the S&P 500 Index has risen 106%, closing at 4,602 on Wednesday.
The US market has climbed 7.3% in the last 7 days, with every sector up and the Consumer Discretionary sector leading the way with a gain of 14.8%.
Over the last week, the US market is up 1.2%, with the Federal Reserve raising rates by 0.25% which seemed to be less than what investors were expecting.
Russian stocks have plummeted both on the Moscow exchange and other exchanges they’re listed on.