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Equity markets continue to suggest that the wall of worry was reinforced enough for prices to rally further in the short term. For now, equity investors seem relatively sanguine with the rise in commodity prices that is apparently being driven more by geopolitical concerns than demand drivers, and its possible inflationary implications. However, the bond market did have something of a reaction as the two-year US Treasury yield traded above 2.4%, on Thursday as the 10-year climbed to 2.9%. The yield gap between the two and ten year remains just below 50 basis points
Having weathered the recent rally in sterling the FTSE 100 reacted on Monday to the ongoing strength of the currency, by falling almost 1%. Giving back some of its recent outperformance from other developed markets. However, Tuesday the 100-index managed to reclaim some of Monday's losses as markets around the globe were cheered by the release of China’s Q1 GDP. China announced that their economy grew by 6.8% in the first quarter, this was ahead of the 6.5% forecast.
The FTSE 100 managed to continue to climb higher in the past week despite the ongoing resilience of the Great British Pound. The FTSE 100 has been outperforming other major indexes for a change as it has been benefiting from the lack of exposure to the technology sector, combined with its heavy weighting in the commodity markets. Commodities, in particular oil have been positively impacted by the geopolitical tensions. The S&P 500 also managed a modest gain on the week despite slipping back on Friday. The Banks started the first quarter earnings season off on Friday. Despite a strong positive outlook statement from the Chairman which accompanied some strong earnings report JP Morgan’s stock fell almost 3% on the day. This may be early evidence that markets have largely priced in the expected strong earnings quarter.
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