Powell's Comments Reassure Markets

Jerome Powell's remarks on Wednesday were largely perceived as less harsh than feared. Though he said that "in recent months, inflation has shown a lack of further progress toward our 2% objective" and it will probably require more time than initially anticipated to gain the confidence needed to cut rates, he also added that the next policy rate move won't be a hike. Moreover, he confirmed that the central bank will shrink its balance sheet at a slower pace starting in June, thereby reducing the amount of Treasuries it lets roll off every month. Treasury yields eased accordingly with the 10-year bond yield losing 16 basis points week-over-week.

U.S. stocks rose after Jerome Powell assuaged fears over potential rate hikes, while investors cheered Apple's expanding profit margins and share buyback program. The tech giant announced that its board had approved $110 billion of share buybacks, the most ever for a public company. This announcement propelled the stock price above $183, up 8.32% for the week, and pushed higher the major stock indices.

The S&P 500 gained 0.55% while the tech-heavy Nasdaq Composite jumped 1.43%. Small cap stocks did better with the Russell 2000 up 1.68%. European indices swung to a mixed finish. The FTSE gained 0.90% while the MSCI EMU dropped 0.98%. Preliminary data from Germany's federal statistics office indicated a modest rise in inflation in April, influenced by escalating food costs and a less significant decrease in energy prices than in prior months. According to a harmonised measure compatible with other EU states, German consumer prices experienced a 2.4% uplift in April, an increase from the 2.3% growth observed year-on-year in the previous month.

In Asia, the Nikkei rose 0.79%. Japan's currency surged against the dollar from a fresh 34-year low hit earlier on Monday, in the wake of Japanese authorities' intervention for the first time in 18 months. The greenback fell as far as 153 yen, down 3.33% over the week.

Energy Plunges, Rate-Sensitive Sectors Rebound    

The WTI oil price lost 6.85% over the week amid a flurry of negative signals for crude markets including easing fears of supply disruptions in the Middle East, concerns over slowing economic growth and data showing robust U.S. stockpiles and production. The energy sector took a hit with a weekly decline of 3.36%. Financials were down 0.63% as Treasury yields were receding. Communication services also ended the week in the red (down 0.55%) following profit-taking on Alphabet's stocks (GOOG down 2.71%).

In contrast, utilities and real estate shined again, up 3.55% and 1.53% respectively, as Treasury yields were falling. The IT sector also led the charge, up +1.51% week-over-week thanks to renewed appetite for Apple's shares (AAPL).

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.