Investors experienced mixed returns last week as the focus turned towards the busiest week of quarterly earnings reports. While mega-cap stocks like Microsoft, Apple, Amazon.com, and Meta Platforms outperformed cyclical and small-caps, cyclical sectors performed poorly as investors weighed new signs of an economic slowdown, particularly in manufacturing. Business spending also slowed as retail inventories accumulated, signalling the need for further cutbacks in production and spending.

In Europe, shares fell amid fears of interest rate increases that could tip the economy into recession. The Eurozone economy expanded less than expected, but inflation rates varied across the region. Meanwhile, business confidence rose in the UK, despite a widening budget deficit.

In Japan, the stock markets gained as the Bank of Japan signalled its continued commitment to its ultra-loose stance. However, inflation forecasts were upgraded but not deemed sufficient to meet the BoJ’s target.

China’s stocks ended mixed ahead of a five-day holiday, with the Politburo reaffirming its supportive policy stance amid an economic transformation and insufficient domestic demand. Industrial profits fell in Q1, but the government announced measures to encourage growth in the trade sector.

As we move into May, investors remain cautious about a possible economic slowdown and will closely watch earnings reports and policy decisions that may affect the global markets.

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