The Week in Review: 15th-19th April
Trading Performance
Following an escalation of the situation in the Middle East, I took a small break from trading as the new week began. Iran launched retaliatory attacks on Israel through Saturday evening, which, despite being mostly unsuccessful reintroduced significant uncertainty into markets. Monday and Tuesday saw traders pricing in the potential impacts of further Israeli strikes on Iranian targets on global geopolitics. This seemed to be the correct decision, as the S&P 500 ($SPX) fell 3.54% last week, the largest downward moves being on Monday and Wednesday. The UKs benchmark index, the FTSE 100 (FTSE) also struggled, falling 0.38% on Monday and a further 1.82% on Tuesday, marking its worst session of 2024.
Rising interest rate concerns held me out of US markets for a third consecutive week. However, a shift in UK market direction allowed me to enter three UK equity positions on Wednesday. This change was likely driven by CPI data, which despite falling above expectations provided a much needed catalyst to drive market direction upwards. This move continued through Thursday and Friday, with the UKs benchmark index closing the week on a three day streak of gains.
As trade fundamentals had remained unchanged, several minor trend reversals into the end of the week allowed me to increase position sizes. Opening two additional long positions on Thursday, and a final position on Friday. This took the number of open trades from three on Wednesday to six on Friday. As of Friday 19th April, the total unrealised PnL for the week sits at 0.51% . In terms of closing these positions, I will likely look to cut position size midway through next week, freeing up cash as US equity prices become more attractive.
USA
US equity markets traded downwards, for the third week running, with all three major indexes closing lower. The Nasdaq 100 ($NDX) led declines through the week, falling 6.05% to 17,037.65, breaking the key psychological level of 18,000. The S&P 500 ($SPX) continued to experience declines last week, with Friday marking a sixth consecutive session of losses. The index dipped below the 5,000 level, closing Friday at 4,967.23. The Dow ($INDU) managed to stem last weeks 2.4%, only falling a further 0.23% this week, as the index trades into Monday at 37,986.40.
Last week lacked any real macroeconomic stimulus, with market sentiment driven by Middle East tensions. Saturday’s Iranian attacks on Israel saw US and UK forces introduced into direct involvement for the first time, as the nations acted to protect Israeli airspace, this involvement was only temporary, but marked a further escalation of the situation nonetheless. Through the start of the week, investors appeared to reduce their exposure to risky assets, shifting capital into safe haven assets such as Gold and the US dollar which have significantly strengthened. This move is not atypical in times of uncertainty, specifically war, with safe haven assets providing relative protection from market volatility.
Europe
The FTSE 100 (FTSE) fell 99.73 points last week, trading into Monday at 7,895.85, as the index failed to find support above the 8,000 level. The prevailing geopolitical situation across both the Middle East and Eastern Europe, alongside macro data prints remained key drivers for index performances. Monday’s session saw a decline in hard commodity prices, negatively impacting energy focussed index constituents, pressuring share prices downward. Volatility continued on Tuesday as unemployment data came in higher than analysts forecasts at 4.2%, while quarterly earnings figures fell 0.1 percentage points above analyst expectations. This sent mixed signals across markets, leading many to question the effectiveness of current BOE inflation controls. A positive turn in momentum came on Wednesday, following the UKs CPI data print for March. Figures came in at 3.2% which despite being 0.1 percentage points above analyst expectations, fell 0.2 percentage points below last months figures as consumer inflation edges toward the 2% target.
Asia
The Nikkei 225 (¥N225) fell 5.09% during last week, closing Friday’s session at 37,068.35. The index broke two key psychological support levels, falling below 39,000 on Tuesday and 38,000 on Wednesday and Friday. The 19th of April marked the indexes worst session of the week, as prices fell 1,011.35 points (2.66%).
Geopolitical tensions, notably the conflict in the Middle East, have remained a primary driver of market activity, increasing investor caution toward positions of risk. This has led international equity sell-offs, as investors park capital in safe haven assets.
A surge in safe haven inflows has also deepened Japanese Yen declines, as the embattled currency continues to trade lower against a strengthening US Dollar. The currency pair now trades at 154.6520 as of Friday’s FX market close, above the 152 level that was broken on April 11th, following the release of US CPI data. The BOJ will meet to decide the direction of Japanese monetary policy this Friday, which may yield some insight into how policymakers plan to slow the price declines of the third most traded currency. If the BOJ continues intervention as a side product of interest rate policy, speculators may expect the Yen to appreciate if rates are hiked, as domestic bond yields increase, encouraging investor inflows.
What to Watch Next Week:
Monday 22nd April
EU Consumer Confidence
US Earnings:
Verizon ($VZ)Tuesday 23rd April
Eurozone Flash Manufacturing & Services PMI
UK Flash Manufacturing & Services PMI
US Flash Manufacturing & Services PMI
US Earnings:
Visa ($V)
Tesla ($TSLA)
Pepsico ($PEP)Wednesday 24th April
US Weekly Crude Inventories
US Earnings:
Meta ($META)
Boeing ($BA)
International Business Machines Corporation ($IBM)Thursday 18th April
US Earnings:
Microsoft ($MSFT)
Alphabet ($GOOG)
Astrazeneca ($AZN)
Intel ($INTC)Friday 19th April
Tokyo Core CPI (Y/Y)
BOJ Interest Rate Decision
BOJ Monetary Policy Statement
US Core PCE Price Index (M/M)
US Earnings:
Exxon Mobil ($XOM)
Chevron ($CVX)
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice
PnL - Profit and Loss