A key measure of U.S. inflation rose as expected in February, putting a spotlight on whether price growth will be cool enough this spring to justify an interest-rate cut in by midyear. The overall personal-consumption expenditures price index rose 2.5% over the 12 months through February, the Commerce Department said Friday. Powell repeated his view Friday that officials need to see more inflation data before they could be confident that price growth was on track to return to the central bank’s 2% goal. Since economic activity has been solid, “we don’t need to be in a hurry to cut,” he added. Powell confirmed on Good Friday the Fed didn’t overreact to cooler-than-anticipated monthly inflation readings at the end of last year or to firmer-than-expected readings at the beginning of this year. He also emphasised the Fed’s interest-rate setting has left the central bank in a good position to react to a range of different paths for the economy. That includes the possibility of cutting rates more than anticipated if the economy slows sharply or holding them at their current level for longer if inflation doesn’t slow as much as expected, he said. A barometer of business conditions at U.S. manufacturers turned positive in March for the first time in 17 months, in another sign that the industrial side of the economy is on the mend. The Institute for Supply Management’s index of manufacturers rose to 50.3% in March from 47.8% in the prior month. Numbers above 50% are viewed as positive for the industrial side of the economy. The index had fallen for 16 months in a row.

On Maundy Thursday, the SMI gained 0.2 per cent to 11,730 points. Among the 20 SMI stocks, there were 13 price gainers and seven price losers. A total of 23.52 (previously: 17.89) million shares were traded. On Good Friday, the much-noticed PCE deflator was published in the USA, a preferred price measure used by the US Federal Reserve to shape its monetary policy. As there was no trading in Switzerland on Good Friday and Easter Monday, local investors will only be able to react to the data on Tuesday. The SMI was held back by a 0.3 per cent fall in the share price of heavyweight Nestle. On the other hand, the equally heavyweight pharmaceutical stocks Novartis and Roche gained 0.8 and 1.3 per cent respectively. UBS lost 1.8 per cent after the presentation of its final annual report for 2023, in which the bank had adjusted the valuation of the acquired Credit Suisse, reducing net income to USD 27.8 billion from USD 29 billion. Sika (+0.6%) traded with a dividend discount of 3.30 francs; adjusted for this, the gain would have been more pronounced.

European shares made modest gains on Thursday, with the FTSE 100 leading the way, despite data confirming the U.K. economy sank into a recession in the final six months of 2023. Elsewhere, the German economy continued to struggle, with figures showing retail sales slumped in February. The Stoxx Europe 600 index gained 0.2% to 512.7 points, after hitting a new record high of 513.5 points mid-morning. In Paris, the CAC 40 remained stable and the SBF 120 added 0.1%. In Frankfurt, the DAX 40 posted its eighth consecutive session of gains, rising by 0.1%. In London, the FTSE 100 climbed 0.3%. Wall Street was closed on Friday and did not reopen until Monday. The European stock exchanges remained closed until Tuesday. VusionGroup jumped 11.1%. The electronic labels specialist published better-than-expected annual results, accompanied by a very encouraging outlook from analysts and the announcement of its first-ever dividend of €0.30 per share. Leisure vehicle manufacturer Trigano (+10%) reported sales growth of 17.8% in the second quarter of its financial year to date and indicated that demand for motorhomes remained buoyant. German airline Lufthansa (+1.5% in Frankfurt) announced that it had reached an agreement with the Verdi union on Wednesday evening on a pay rise for its ground staff, following weeks of industrial action and strikes.

Stocks fell broadly Monday after new economic data prompted investors to dial back bets on interest-rate cuts this year. Coming off its best first quarter since 2019, the S&P 500 started the trading day modestly in the green. But it reversed course after the latest Institute for Supply Management report suggested manufacturing activity expanded in March for the first time since September 2022. The broad market index finished down 0.2% and the Dow Jones Industrial Average dropped 0.6% after both closed out last week at records. Strength in large technology stocks helped the Nasdaq Composite eke out a 0.1% gain. Based on a survey of purchasing managers, the ISM manufacturing index for March came in at 50.3 - up from 47.8 in February and above the 48.1 reading anticipated by economists surveyed by The Wall Street Journal. A reading above 50 indicates an expansion in activity. Interest-rate futures showed that investors still anticipate that the Fed will cut rates three times this year, starting at its June policy meeting. But the expected chances of three or more cuts declined to around 55%, according to CME Group, from 66% Thursday. At the start of this year, investors had expected six rate cuts. Stocks have largely shrugged off this year’s rise in Treasury yields and reduced bets on interest-rate cuts. The S&P 500 climbed 10% over the first three months of the year, adding to last year’s 24% gain. The gains have been fueled by excitement over artificial intelligence, solid corporate earnings and investor confidence that inflation is on its way back to the Fed’s 2% target, despite two months of hotter-than-expected price data. All of the S&P 500’s 11 sectors except real estate advanced in the first quarter. That momentum didn’t carry over into Monday. Among the many stocks that fell, Walgreens Boots Alliance dropped 9.9% after the pharmacy giant booked a steep quarterly loss last week. Shares in Trump Media & Technology Group slid 21%. Former President Donald Trump’s social-media company reported full-year earnings results for last year showing that it had a nearly $60 million operating loss. Traders are watching to see if its board will grant the former president a waiver to sell or borrow against the stock.

Asian indexes diverged for the Tuesday trading session. The region's stock markets were led by Hong Kong, where the Hang Seng Index HSI rose by 2.4 per cent on the first trading day after the Easter break. The stock market in Shanghai, on the other hand, is consolidating the gains it recorded on Monday in response to the convincing economic data. China Vanke plunged 11.4 per cent in Hong Kong, while Xiaomi gained 12 per cent. The company presented its first electric car. The Tokyo stock exchange barely held its ground. The Nikkei 225 index traded at 39,782 points after falling significantly on Monday. In Seoul, South Korea, the Kospi is trading 0.2 per cent higher following domestic inflation data. Hyundai Motor lost 4.2 per cent following the car manufacturer's report of a drop in sales in March.

Yields on U.S. government debt jumped by the most in more than a month on Monday on signs of persistent inflation in the Institute for Supply Management’s manufacturing index and last Friday’s PCE report. The 10-year Treasury note yield jumped 13 basis points to 4.323%. The 2-year Treasury note yield rose by 9 basis points to 4.714%.

Jefferies upgrades Richemont target to CHF 155 (135) - Buy
Target price Lonza: Barclays raises target to CHF 640 (550) - Overweight
Jefferies lifts Zurich target to CHF 445 (430) - Hold

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