Global Equities Advance Amid A Steady Stand from Federal Reserve

In the past fortnight, the focus was on the Federal Reserve, as the market closely monitored the prospects of future monetary policy decisions. The Fed opted to maintain its policy rate without changes, but the central bank's key message was to keep rates steady for an extended period. [EasyDNNnews:PaidContentStart]

Major market indices witnessed mixed trade, reflecting a combination of impactful earnings reports and economic indicators. While the S&P 500 Index and the Dow Jones Industrial Average saw moments of reaching their intraday peaks, smaller-cap indices experienced declines. The broader market's progress was limited, as evidenced by a slight decrease in an equally weighted S&P 500 Index. January wrapped up with the S&P 500 up by 1.6 per cent, despite the equal-weight version dropping by 0.90 per cent and the Russell 2000 Index, which focuses on Small-Cap companies, falling by nearly 4 per cent. 

This period marked the peak of the earnings season for the fourth quarter, with key announcements from major tech corporations significantly influencing the stock market's main indexes. Last week, the S&P 500 and Nasdaq Composite Index experienced significant declines due to disappointing earnings forecasts from Microsoft, Alphabet (Google's parent company), and Advanced Micro Devices. However, the indices managed to regain most of their losses, buoyed by better-than-expected earnings results from Amazon.com, Meta Platforms (formerly known as Facebook), and Apple. 

The Federal Reserve's meeting also played a role in shaping market sentiment. The Fed chose to keep short-term interest rates steady, a move that was largely anticipated. However, Fed Chair Jerome Powell mentioned in his conference following the meeting that a rate cut in March seemed unlikely. Consequently, the likelihood of a rate reduction at the Fed's upcoming meeting decreased to 20.5 per cent from the prior week's 47.7 per cent. Expectations for a rate cut further diminished following the Labor Department's announcement that January saw the addition of 3,53,000 nonfarm jobs, almost twice the expected number. 

In Europe, the STOXX Europe 600 Index closed nearly unchanged. Several of the major stock indices experienced slight declines, with France's CAC 40 Index dropping by 0.55 per cent, Germany's DAX by 0.25 per cent, and the UK's FTSE 100 Index by 0.26 per cent. Conversely, Italy's FTSE MIB Index saw a gain of 1.11 per cent. 

The eurozone managed to dodge a recession in the last quarter of 2023, with its GDP showing no change from the previous quarter and a slight increase of 0.1 per cent year-over-year. The Bank of England maintained its prime interest rate at a near 16-year peak of 5.25 per cent, hinting at a potential rate cut for the first time since inflation rates surged post-pandemic. 

In Japan, the stock market experienced growth, with the Nikkei 225 Index rising by 1.1 per cent and the TOPIX Index by 1.7 per cent, bolstered by a strong earnings season and benefits from increased tourism and price hikes for companies focused on the domestic market. 

Conversely, China's stock market faced setbacks, with discouraging economic data and concerns over the property sector dampening growth prospects. The Shanghai Composite Index suffered its worst week since 2018, dropping by 6.19 per cent, and the CSI 300 Index recorded its most significant weekly loss since 2022, falling by 4.63 per cent. Both indices reached their lowest in five years. The Hang Seng Index in Hong Kong also lost 2.62 per cent in the past fortnight.

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