The Dow Jones closed more than 320 points higher and the S&P 500 added nearly 0.4% on Monday, the first trading day of the second quarter, while the Nasdaq dipped 0.3%, as investors digested a surprise cut in oil output from OPEC+ and the impact it could have on inflation and the Fed’s monetary policy. Money markets now see a 65% probability of a 25bps rate hike in the fed funds rate next month, compared to 55% earlier. In Europe, the Euro Stoxx 50 Index lost 0.1% as investors digested final manufacturing PMI data from major European countries that showed the Eurozone factory activity in March remained in contraction territory for a ninth straight month. 

Summary as at 04.04.2023 

  • Asian shares kept to a small range on Tuesday as a raft of weak manufacturing data raised concerns over slowing economic growth, while a spike in oil prices also brewed fears of higher inflation. The Hang Seng was the worst performer of the day, down 1.1% as technology and property shares were hit with a fresh wave of selling. 
  • Oil prices rose slightly this morning as markets weighed a surprise output cut by the OPEC+ against fears of slowing economic growth after a barrage of weak manufacturing indicators from across the globe. 
  • European shares are poised to nudge up in contrast to US equity futures which inched lower this morning. 
  • The Reserve Bank of Australia this morning maintained the cash rate at 3.6%, as expected, marking the first pause in the central bank’s hiking cycle since it started raising rates in May 2022. The decision came amid efforts to account for policy lags, with the board adding that it stands ready to resume raising borrowing costs should the economy need it. 
  • US factory activity decreased to 46.3 in March, the lowest since May 2020 and compared to 47.7 in February and a consensus of 47.5, implying that rising interest rates and growing recession fears are starting to weigh on businesses. The reading pointed to a fifth straight month of contraction as companies continue to slow outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period. 
  • HSBC on Monday pushed aside a proposal by an activist shareholder in Hong Kong to spin off its mainstay Asia business, reiterating the adverse impact on the Asia-focussed bank’s cost and clients. Addressing an informal meeting of shareholders in Hong Kong, HSBC Chairman Mark Tucker said the board was unanimous in recommending that shareholders vote against proposals to restructure the bank and pay fixed dividends. 
  • L’Oreal has agreed to acquire luxury cosmetics brand Aesop, which was founded in Melbourne before developing a cult global following, for an enterprise value of $2.53 billion. The transaction, which is expected to close in Q3, caps months of negotiations for the asset.