Zurich – Weekly Update 22nd May 2023

Weekly Investment News

US stocks finished the week up 2.1% in euro terms last week as investors priced in the possibility of a deal being struck in Washington that would end the current debt ceiling impasse. On Thursday, news of a potential vote being carried out saw US stocks rise to their highest levels since August of last year. Unfortunately, the week ended with Republican officials walking out of negotiations in Washington, leaving further uncertainty for investors as to the US’s short-term ability to repay its debts. Earlier in the week economic data suggested a robust economy with industrial production data surprising to the upside, increasing 0.5% well above expectations of a flat result. US retail sales came in slightly below expectations however, rising by 0.4% despite expectations of a 0.7% figure. Core retail sales which exclude autos, gasoline, building materials and food rose 0.7% for the month of April in line with expectations.

In Europe, Germany’s Dax Index which comprises of Germany’s 40 largest companies, hit a record high on Friday after positive earnings reports improved sentiment. Large German car manufacturers and industrial stocks have benefited from a more positive outlook for Europe. A milder than expected winter and increased trading with China has meant European economies may indeed avoid recession which had been a fixture of European investor sentiment for the previous number of months. In the UK, the May consumer confidence figure rose to its highest level in over a year, rising by 3 points to a figure of -27. This came as the Bank of England changed its outlook for the UK economy, stating it no longer expects a recession.

Stocks in Asia Pacific did not have as positive a week, with Hong Kong equities down considerably on the back of poor US-China relations. In contrast however Japanese equities rallied because of improved sentiment and increased investor inflows. Many investors have re-evaluated their position on Japan in 2023, which has gained 16.2% year to date.