Risk assets finally took a pause for breath this week as prospects that an initial interest-rate cut could be delayed by policymakers weighed on equity markets. The MSCI World Equity Index declined -0.4%, with the bellwether S&P 500 Index returning -0.8%, the technology centric Nasdaq -0.9%, and the Euro Stoxx -0.7%.
A major theme so far in 2024 has been the continued headline resilience of the global economy, led by the US. Continued hot macro data alongside growing concerns over a potential reacceleration of inflation as oil and commodity prices surge, are forcing a significant shift in the view over the path for expected rate-cuts this year.
Interest rates remain elevated in the context of recent history, yet this has seemingly done little to hold back the US labour market. March’s monthly jobs report, arguably the most important economic data point alongside inflation, revealed a gain of 303,000 jobs versus c. 205,000 expected, the strongest figure in ten months. Meanwhile, the unemployment rate improved to 3.8% from 3.9% the prior month.
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