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As of Friday's stock market close, the Dow Jones Index (US30) decreased by 0.49% (for the week +0.12%). The S&P 500 Index (US500) lost 0.65% (for the week +0.10%). The Nasdaq Technology Index (US100) closed negative 0.96% (for the week -0.49%). Last week, the real estate, health care, and technology sectors were the biggest laggards, while energy, communication services, and commodities outperformed the market. The moves came as stronger-than-expected US inflation data raised concerns that the central bank may further delay interest rate cuts. The Fed had initially planned to start cutting rates in March, but that deadline was then pushed back to June and could now be pushed back even further. The rate is expected to remain at 5.5%, but the real factor could be the conference call after the meeting. If Powell begins to back away from cutting rates this summer, it could put further pressure on the indices.

Friday saw a huge quarterly derivatives expiration in the US market, accounting for $5.1 trillion in index and equity options. Since the consensus has been bullish in equities recently, market makers now have huge hedging long positions open in equities and indices. Once the derivatives expire, market makers will get rid of this hedge and thus put pressure on the stock market. Statistically, corrections in bull markets have often occurred in periods of quarterly expirations. Perhaps now it will help the indices to let off a little steam.

The Nvidia GTC developer conference, which begins today, will be closely watched in anticipation of announcements related to artificial intelligence. Investors will undoubtedly want to hear announcements that keep the company's stock skyrocketing. CEO Jensen Huang will deliver the keynote address and possibly offer attendees a first look at its newest products, including the next-generation B100 GPU for artificial intelligence and high-performance computing applications. Nvidia's stock gains over the past year have increased its market value by $1 trillion, putting it at the top of the S&P 500 Index.

In addition to the Fed meeting, internationally, investors' attention this week will be focused on interest rate decisions from Japan, the UK, Australia, Brazil, Turkey, Switzerland, and Norway. In addition, inflation data from Canada, the UK, South Africa, and Japan will be the focus.

Equity markets in Europe were mostly down on Friday. Germany's DAX (DE40) was down 0.03% (for the week +1.39%), France's CAC 40 (FR40) added 0.04% (for the week +2.24%) on Friday, Spain's IBEX 35 (ES35) was up 1.02% (for the week +3.09%), and the UK's FTSE 100 (UK100) closed negative 0.20% (for the week +0.88%).

Oil prices rose nearly 4% last week as the International Energy Agency released an optimistic demand outlook and predicted a small deficit this year. WTI crude prices rose above $81 a barrel on Monday, extending last week's gains, as heightened geopolitical risks raise supply concerns. Ukraine has stepped up drone strikes on Russian refineries over the past week, shutting down about 7% of Russian refining capacity in the first quarter. Israeli Prime Minister Benjamin Netanyahu also said he would press ahead with plans to push into the Rafah enclave in the Gaza Strip, complicating the chances of a peace deal.

Silver prices climbed above the $25 an ounce mark on Friday and were up more than 4% for the week, driven by safe-haven demand as investors sought refuge from increased military and inflation risks. The latest US consumer price index and producer price index data came in stronger than expected. At the same time, geopolitical tensions on the global stage intensified after Russia moved its tactical nuclear weapons closer to NATO.

US natural gas prices fell below $1.7 per Mmbbl on Friday, marking a more than 6% decline for the week. This was driven by forecasts of mild weather that would reduce the demand for gas for heating. Despite the larger-than-expected withdrawals, the latest EIA data shows gas in storage is still 37.1 percent above average for this time of year.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) was down 1.34% for the week, China's FTSE China A50 (CHA50) was up 2.04% for the 5 trading days, Hong Kong's Hang Seng (HK50) was up 1.86% for the week, and Australia's ASX 200 (AU200) was negative 1.88%. Asian equity markets mostly rose on Monday as investors were cheered by better-than-expected Chinese retail sales and industrial production figures for the first two months of this year. However, China's urban unemployment rate stood at 5.3% in January-February 2024, up from 5.1% in December. This is the highest rate since July last year.

The all-important Bank of Japan meeting will be held as early as tomorrow. Signs that employers are planning significant wage increases seem to have inclined the central bank to finally abandon the massive monetary easing that has been applied for years to stimulate growth in the country. The last time the rate was raised was 17 years ago. The current meeting has a 56% chance of a +10bp BoJ rate hike.

• S&P 500 (US500) 5,117.09 −33.39 (−0.65%)
• Dow Jones (US30) 38,714.77 −190.89 (−0.49%)
• DAX (DE40) 17,936.65 −5.39 (−0.03%)
• FTSE 100 (UK100) 7,727.42 −15.73 (−0.20%)
• USD Index 103.45 +0.02 (+0.01%)
   

Important events today:

• China Industrial Production (m/m) at 04:00 (GMT+2);
• China Retail Sales (m/m) at 04:00 (GMT+2);
• China Unemployment Rate (m/m) at 04:00 (GMT+2);
• Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• Eurozone Trade Balance (m/m) at 12:00 (GMT+2).

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