Lowest fear gauge level recorded since late 2021

Market Summary

Last week, investors focused on the mixed signals for major US benchmarks and Chinese equities fell due to possibility of new U.S. investment restrictions.

In the United States, major benchmarks ended mixed as Q1 earnings took center stage during a quiet economic week. Housing data weakened with a drop in existing home sales and a 0.9% YoY decrease in home prices. In Europe, stocks rose as optimism about the economy exceeded concerns over prolonged higher interest rates. UK's March annual consumer price growth decelerated less than anticipated to 10.1% from February's 10.4% due to a surge in food and drink prices.

In Asia, Japan’s stock markets gained over the week. In March, core consumer price inflation exceeded the Bank of Japan's 2% target, creating pressure on the central bank's new governor, Kazuo Ueda, to implement measures towards normalizing monetary policy. In China, equities fell due to mixed economic data and news of potential fresh investment restrictions by the U.S. China's Q1 2023 GDP growth exceeded expectations, expanding by 4.5% YoY compared to last year's 3.0%.

Major News

Elon Musk announced TruthGPT, an AI platform competing with ChatGPT, despite his concern of AI's destructive potential.

Civilian deaths and injuries as national army led by General Abdel Fattah al-Burhan clashed with paramilitary group Rapid Support Forces in Khartoum.

Credit Suisse under fire from US senators for hampering a Nazi account investigation, despite refuting the allegations.

Two arrested for operating an "illegal police station" in NY as Chinese agents, and 34 Chinese police officers charged with harassment of Chinese dissidents in the US.

What Caught Our Attention

China's economy grew by 4.5% in Q1 2023 compared to the same period in 2022, which is an improvement from the lockdowns in Shanghai and elsewhere last year.

The country's economic recovery has been scrutinized by investors since abandoning its zero-covid regime in 2021. Retail sales and catering grew by over 26%, indicating that consumers are spending, while exports held up better than expected. Property sales were strong in China's big cities, but not in other areas, revealing a localized malaise in the national housing slump. Despite economic problems such as rising youth unemployment and mounting provincial debt, the figures should allay doubts about China's economic recovery this year.

Source: Kredens Capital, T. Rowe Price, Bloomberg, Financial Times, Wall Street Journal, The Economist, Nikkei Asia