WEEKLY MARKET RECAP: April 01 – April 05, 2024

Happy Friday, traders.

Welcome to our weekly market wrap, where we look back at these last five trading days with a focus on the market news, economic data and headlines that had the most impact on the financial market – and may continue to into the future for the US Dollar and other key correlated assets.

In 2023, stocks and bonds both rallied. The first quarter of 2024, however, saw stocks reaching new heights, while bonds experienced a modest downturn, as the market scaled back its rate cut expectations following surprisingly strong economic data.

As shown in the chart of the week, U.S. large cap stocks continued their dominance, outshining other asset classes with a 10.6% return. However, unlike last year, the rally was relatively broad-based as all sectors, save one, contributed to the gains. Meanwhile, small caps, which lean more toward value stocks, posted a relatively modest 5.2% gain. Internationally, developed markets (DM), with a 5.8% return, outpaced their emerging market (EM) counterparts. Within DM, Japan’s export-driven stock market and European equities both reached record highs, driven by the Yen’s multi-decade lows and excitement around innovations in the healthcare sector, respectively. On the other hand, EM equities were up by a slight 2.2%, as a surge in the dollar took a bite out of impressive gains in Taiwan, Korea and India, while China’s continued economic challenges manifested in lackluster market performance.

Within fixed income, less rate-sensitive high yield bonds gained 2.1% on the back of further spreads compression, while the broader market declined 0.8%, as a rise in yields weighed on bond prices. In the alternatives space, commodities rebounded, buoyed by a broad uptick in prices, whereas rate-sensitive REITs came under pressure and ended the quarter down 1.3%. Lastly, cash, with a 1.3% return, lagged many asset classes while still carrying a reinvestment risk amid potential rate cuts.

Thanks for reading! Have a great weekend.        

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