Wednesday, 20th February 2023

Weekly Market Update


US equities closed mixed for the week as investors reacted to stronger-than-expected inflation readings. The Nasdaq composite led the gains, while the S&P 500 recorded its first weekly loss of 2024. The Dow Jones closed flat across this time. European equities closed broadly higher, as investors reacted to economic data that pointed to a decline in inflation. The STOXX 600, German DAX, and French CAC 40 closed higher. The UK’s FTSE 100 also followed higher, despite entering a technical recession. Meanwhile, Oil prices rose last week on the back of mixed global economic data. WTI and Brent crude ended last week higher at $79.19 and $83.47 per barrel, respectively, despite the International Energy Agency’s February report forecasting a surplus in 2024, driven by slowing demand and strong supply from non-OPEC+ producers. Meanwhile, gold ended the week slightly lower at $2024.10 per Oz.

The week ahead:
Mon: Peoples Bank of China (PBoC) Loan Prime Rate
Tue: Japanese Trade Balance
Wed: US Federal Open Market Committee (FOMC) Meeting Minutes
Thu: Eurozone Inflation Readings (CPI Consumer Price Index)
Fri: Reserve Bank of India (RBI) Meeting Minutes

Outlook: We estimate that financial assets will commence their recovery after interest rates and inflation reach their peak. Any valuation reset through a market correction offers interesting opportunities for investors with a medium-to-long-term horizon. We believe that buying high-quality, profitable, blue-chip equities with strong balance sheets and positive free-cashflow yields will most likely result in double-digit return in the next 12 months. Fixed-income securities also offer attractive yields at these levels, without subjecting portfolios to much downside risk.

Asset class forecasts*

[wpdatatable id=14]
*Source: Goldman Sachs (GS) Global Investment Research and GSAM as of January 2021.

Developed Markets

North America
US indices closed mixed, the S&P 500 recorded its first weekly decline of 2024 as investors reacted to higher-than-expected inflation readings. The small-cap Russell 2000 index saw similar volatility: reaching its largest daily drop since June 2023 before rebounding to lead the gains for the week. The Nasdaq Composite led the gains, closing 2.31% higher, while the S&P 500 lost 0.35% and the Dow Jones Industrial Average closed flat. Other indices saw similar declines on Tuesday after the Labour Department reported that consumer prices had risen 0.3% in January, just above consensus estimates of 0.2%. More concerning: core consumer prices (less food and energy) saw a 0.4% rise, fixing the year-over-year rise at 3.9%, nearly double the Federal Reserve’s 2.0% target and marking the largest rise in over eight months. This development dims the already faint prospects of immediate interest-rate cuts by the Fed, potentially reviving discussions about resuming rate hikes. Some policymakers stress the need for a more comprehensive easing of price pressures before considering rate cuts. Stocks regained their footing the following day, following a statement from Chicago Fed President, Austan Goolsbee, stated that slightly elevated inflation figures across the coming months are consistent with reaching the Fed’s 2% inflation target. Equities fell again on Friday after the Labor Department reported that producer prices had increased 0.3% in January—the largest increase in five months (and following a 0.1% decline in December). Core prices rose 0.5%, well above expectations of around 0.1% – likely tied to the reduced output across the Red Sea. Ultimately, inflation data caused investors to lower their expectations for potential rate cuts across the year. The CME FedWatch Tool now estimates only a 10.5% chance of a rate cut in March (compared with the 65.1% reading in February). Besides inflation, other economic data released across the week also underwhelmed, although signs of weaker growth seemed to help calm inflation concerns. Thursday saw the Commerce Department report that retail sales had dropped 0.8% in January. Initial jobless claims also came in below consensus, while continuing claims were slightly above.

Europe & UK
Signs of cooling inflation in contrast with the US saw European equities close higher as the outlook for rate cuts improved. The pan-European STOXX Europe 600 Index ended the week 1.39% higher. The local indices followed: Germany’s DAX and France’s CAC 40 Index advanced 1.13% and 1.58%, respectively, with upbeat corporate earnings adding further tailwind. The UK’s FTSE 100 Index added 1.84%, despite the latest readings showing a dip into recession. Forecasts by the EU’s executive arm, the European Commission (EC) show a welcome fall in expected inflation readings – now predicted to drop to 2.7% (down from 3.2%). These figures still remain above the ECB’s 2% target. “Lower energy commodity prices, weaker economic momentum and recent inflation outturns set inflation on a lower path, lower than was anticipated last autumn,” the EU’s economy commissioner, Paolo Gentiloni said. Growth forecasts were also revised lower, now expected to reach just 0.8% (down from 1.2%). “After narrowly avoiding a technical recession in the second half of last year, prospects for the EU economy in the first quarter of 2024 remain weak,” the EC said. Gentiloni tempered the gloomy outlook by stressing that “the conditions for a gradual acceleration of economic activity this year are still in place.” The European Central Bank (ECB) has held rates steady so far in 2024, but is widely expected to begin cutting rates later this year in the face of slowing consumer prices and a weakening economy. Meanwhile, in the UK, official data showed that the UK fell into recession across Q4 2024 while inflation held steady in January – adding to the sentiment behind rate cuts from the Bank of England (BoE) as soon as June. Preliminary estimates of gross domestic product (GDP) showed a larger-than-expected contraction of 0.3% in Q4. The economy shrank 0.1% in Q3. (Two consecutive quarters of GDP contraction meet the technical definition of a recession). The UK’s annual consumer price growth came below consensus forecasts – reaching 4.0% for January (the same as in December). Core inflation (excluding volatile food and energy prices) also came in unchanged at 5.1%. But services inflation accelerated to 6.5%. BoE Governor Andrew Bailey downplayed the underwhelming GDP, stating that a recession would be “very shallow” and that more emphasis should be placed on recent indicators, which “have shown some signs of an upturn.” Bailey later added in a statement to the parliamentary committee that the inflation readings represented “good news.”

Japan’s indices rose across the week, the Nikkei 225 closed at its highest levels in 34 years as it gained 4.30% for the week. The broader TOPIX followed, closing 2.63% higher. Yen weakness and positive corporate earnings releases appeared to prop up the indices. On the economic front, weak Q4 growth data added to uncertainty about the future path of the Bank of Japan’s (BoJ) monetary policy, which has long been dependent on reaching its 2% inflation target. Japan has dealt with a largely deflationary environment, and thus the BoJ has kept policies accommodative in contrast with its developed market peers. The BoJ’s return to policy normalisation now seems increasingly complicated: the Japanese economy unexpectedly shrank in Q4 2023, entering a technical recession as sticky inflation and a weak yen weighed on private spending, which largely offset improved export demand. GDP fell 0.1% quarter-on-quarter in Q4 according to the latest government data. This came below expectations of a 0.2% rise, but improved from the 0.8% decline seen in Q3. Year-on-year, GDP fell 0.2%. Two straight quarters of GDP contraction put the Japanese economy in a technical recession. The technical recession now presents a challenge to the BoJ’s plans to begin phasing out its ultra-dovish policy this year. Lacklustre growth is likely to limit the extent to which the BoJ will be able to raise interest rates and tighten monetary conditions. While inflation is closer to the BoJ’s 2% target range, it still remains above that level amid persistent price shocks from high import prices and a weak yen. Wage growth has also been subpar.

Emerging Markets

Chinese markets were closed for the week in celebration of the Lunar New Year, which saw an uptick in consumer spending – the evidence of which will likely be welcome news for China’s government, which is grappling with deflation and an ailing property sector crisis that has dampened consumer confidence. China’s stock markets resume trading on Monday, February 19. Across 2023 China narrowly beat its economic growth target of 5% – one of its lowest benchmarks in decades. Analysts now expect the economy to face stiff headwinds for the remainder of the year. A key headwind: Deflation, is yet to be rectified. China is experiencing its sharpest decline in consumer prices in over 14 years, with producer prices dropping 2.5% in January – a 16th consecutive monthly drop. Alarm bells have been ringing, with many fearful of prolonged deflation in China (exacerbated by the real estate slump woes, stock market downturn, loss of investor confidence, and consumer demand. These issues are expected to have weighed on the Lunar New Year demand. The deflationary pressures will likely have an impact on the global economy, potentially accelerating interest rate cuts in emerging markets reliant on Chinese goods. Meanwhile, the PBoC (People’s Bank of China) announced its expectations of a modest boost in consumer prices in the near future, adding its vow to be accommodative in an attempt to boost domestic demand and consumption.

Indian equities closed higher after the Reserve Bank of India’s Monetary Policy Committee (MPC) meeting. The BSE Sensex and Nifty 50 gained 1.16% and 1.19%, respectively. The previous week saw the six-member rate-setting panel, headed by Governor Shaktikanta Das, decide not to alter the benchmark repo rate (the rate at which RBI lends money to banks to meet their short-term funding needs) in an attempt to get more control over retail inflation and economic growth. The benchmark repo stands at 6.5% (unchanged since February 2023). In its commentary, the MPC maintained its stance of ‘withdrawal of accommodative policies’, expressing cautious optimism over its policy. The MPC also emphasised its commitment to monitoring the Consumer Price Index (CPI), including food and fuel inflation, to align with the RBI mandate target of 4% on a sustainable basis. CPI inflation rose to 5.7% in December 2023 after moderating to 4.9% in October 2023. The RBI maintained that inflation figures could see a ‘sporadic’ spike in food prices, especially that of cereals, pulses, eggs, meat, and meat products, following supply chain disruptions. The next MPC meeting is scheduled for the first week of April, during which investors will be hopeful for news of a cut in rates. Fresh from presenting a record sixth Union Budget, Finance and Corporate Affairs Minister Nirmala Sitharaman spoke in a media interview: stating: “The headwinds that we see are global, essentially external to India, but which may impact us as well. There are those uncertainties which are collaterals of a war (Russia-Ukraine) which doesn’t seem to end, and a second war has begun (Israel-Hamas). Also, there are huge threats for free movement even in open areas, like the attacks on shipping lanes in the Red Sea. So these are the big challenges whose spillover effects we cannot predict now: whether oil and commodity prices will go up, or whether transportation is becoming so threatened that insurance cover for them will not be forthcoming. I don’t think there are any domestic challenges which we cannot foresee. The usual thing is about the monsoon. Will it be successful, will it be enough or will there be a shortfall? The recent reports about El Nino receding give me hope that the upcoming Monsoon will be a good one.”

Major MENA regional benchmarks closed higher across the week: Dubai’s DFMGI gained 2.40%, while Saudi Arabia’s TASI gained 2.24%. UAE Prime Minister, Sheikh Mohammed bin Rashid al-Maktoum said that the UAE reached a record high of non-oil trade – amounting to 3.5 trillion dirhams ($952.93 billion) in 2023. Trade in non-oil goods rose 12.6% from the previous year, while exports of goods and services surpassed 1 trillion dirhams to set a new record, as per Foreign Trade Minister, Thani Al Zeyoudi.” Meanwhile, with regards to regional hostilities, the US has proposed a UN Security Council resolution calling for a temporary ceasefire and for Israel not to go ahead with a planned offensive on Rafah in southern Gaza. This marks the first time the US has explicitly backed a ceasefire in the Israel-Hamas conflict, though it adds that the temporary truce should started “as soon as practicable”. The appeal over Rafah, where about half of Gaza’s 2.3 million population have sought refuge, comes after similar comments were made by President Joe Biden in recent days.

Commodities and Forex

Oil prices rose last week on the back of mixed global economic data. WTI and Brent crude ended last week higher at $79.19 and $83.47 per barrel, respectively, despite the International Energy Agency’s February report forecasting a surplus in 2024, driven by slowing demand and strong supply from non-OPEC+ producers. Meanwhile, gold ended the week slightly lower at $2024.10 per Oz.

The US dollar fluctuated last week as investors weighed strong inflation data with a slowdown in spending among consumers. The US dollar index appreciated by 0.22% on the week, as limited progress in recent inflation prints has supported dollar strength in 2024. Meanwhile, the yen weakened to its lowest level against the dollar since November 2023, eventually closing the week at ¥150.23, as GDP contracted for the second consecutive quarter in 4Q.


WTI Oil ($/barrel)$72.28$75.85$71.65$80.26
Brent Oil ($/barrel)$77.33$81.71$77.04$85.91
Gold ($/oz)$2053.70$2067.40$2091.80$1842.20
Natural Gas ($/mmBtu)$2.08$2.10$2.51$4.47


Euro (€/$)1.07921.08391.10411.0701
Pound (£/$)1.26381.27101.27461.2063
Japanese Yen (¥/$)148.35146.37141.02130.97
Swiss Franc (CHF/€)0.93530.93500.92890.9890
Chinese Yuan Renminbi (CNY/$)7.12097.10847.08426.9225

Index Valuations

Index Return

Equities1 WeekMTDQTDYTD
S&P 5001.40%3.77%5.52%5.52%
DJ Industrial Average0.09%1.41%2.74%2.74%
Russell 20002.44%3.25%-0.76%-0.76%
Russell Midcap1.26%2.71%1.25%1.25%
STOXX Europe 50 (€)1.44%1.58%4.59%4.59%
STOXX Europe 600 (€)t0.22%-0.14%1.31%1.31%
MSCI EAFE Small Cap-0.46%-1.80%-3.41%-3.41%
FTSE 100 (£)-0.56%-0.76%-2.02%-2.02%
DAX (€)0.05%0.13%1.04%1.04%
FTSE MIB (€)1.43%1.34%3.09%3.09%
CAC 40 (€)t0.73%-0.12%1.48%1.48%
SWISS MKT (CHF)-1.32%-2.13%-0.41%-0.41%
TOPIX (¥)0.72%0.27%8.10%8.10%
Hang Seng (HKD)1.37%1.69%-7.63%-7.63%
MSCI World1.07%2.41%3.66%3.66%
MSCI China Freet3.07%3.21%-6.61%-6.61%
MSCI EAFE0.12%-0.99%-0.41%-0.41%
MSCI EM0.76%2.04%-2.69%-2.69%
MSCI Brazil (BRL)0.64%0.33%-3.95%-3.95%
MSCI India (INR)0.54%1.22%3.46%3.46%

Fixed Income

Bloomberg Aggregate-0.82%-1.20%-1.47%-1.47%
Bloomberg Euro Aggregate-0.98%-2.06%-4.01%-4.01%
Bloomberg US High Yield0.13%0.17%0.17%0.17%
Bloomberg Euro High Yield (€)-0.14%-0.17%0.57%0.57%

Blend Fund Performance Year To Date:

Blend Fund Performance Since Inception:

Direct Fund

(09/02/24)1 week %1 month %6 months %YTD %1 year %2 years %
Aditum Global Discovery-0.25%0.43%5.07%0.27%3.66%-
BlackRock GF World Healthscience USD1.20%2.16%5.62%5.16%8.72%8.41%
BlackRock GF World Mining USD-3.39%-6.95%-9.75%-10.86%-17.91%-16.81%
Emirates Global Sukuk-0.26%-0.14%2.04%-0.87%2.20%-2.61%
Emirates MENA Fixed Income-0.18%-0.40%2.74%-2.00%0.97%-6.69%
Emirates MENA Top Companies0.23%-2.46%-1.46%-0.53%9.29%-2.73%
Franklin Gold and Precious Metals USD-4.01%-6.33%-6.68%-11.60%-13.43%-28.85%
Harris Associates Global Equity-0.36%-1.32%-1.65%-1.92%-0.06%-7.48%
Loomis Sayles Global Growth Equity Fund4.33%6.26%10.86%5.21%24.46%13.18%
Loomis Sayles Multisector Income Fund-1.47%0.00%3.71%-0.97%1.72%-5.47%
PineBridge Japan Small Cap Equity-3.18%-4.17%-6.02%-5.58%-14.08%-21.65%
UBAM 30 Global Leaders Equity $0.63%3.82%9.51%2.33%16.38%6.73%
UBAM Swiss Equities0.57%0.89%-1.93%0.89%-1.95%-15.02%
iShares US Corporate bond Index0.31%-0.28%3.72%-0.28%3.46%-5.99%

Zurich Managed Funds

(09/01/24)1 week %1 month %6 months %YTD %1 year %2 years %
US dollar Adventurous-0.08%3.19%6.96%1.24%10.16%-1.81%
US dollar Blue Chip-0.18%2.23%5.41%1.17%7.10%-3.79%
US dollar Cautious-0.73%1.10%3.70%0.14%4.17%-6.56%
US dollar Defensive-1.28%0.14%2.29%-0.74%1.60%-8.89%
US dollar Performance0.00%2.77%6.31%1.67%9.07%-2.17%

Zurich Mirror Funds

(09/02/24)1 week %1 month %6 months %YTD %1 year %2 years %
ZI Canaccord Genuity Balanced0.82%2.11%4.06%0.78%4.89%-5.00%
ZI Canaccord Genuity Growth1.22%2.65%4.67%1.18%6.46%-4.48%
ZI Canaccord Genuity Opportunity1.61%3.43%6.73%2.19%9.14%-1.43%
ZI Emirates Active Managed fund-0.38%1.71%2.90%0.82%3.97%-10.46%
ZI Emirates Balanced Managed fund-0.41%1.16%0.37%0.29%0.10%-13.86%
ZI Emirates Emerging Market Debt-0.41%1.37%6.35%-0.65%-0.39%-13.95%
ZI Emirates Emerging Market Equity2.70%-0.70%2.44%-2.00%1.13%-18.54%
ZI Emirates Islamic Balanced Managed fund0.11%1.30%3.50%0.78%4.74%-5.62%
ZI Loomis Sayles U.S. Growth Equity3.78%8.43%14.79%7.08%36.92%22.43%

* Data is lagged by 1 day.
**   Data is lagged by 2 days.