Global equity indices retreated from at or near record high levels this week. Traders noted technical trading around some key sector reversals, historically weak seasonal patterns observed post March options expiration and pre-Q1 earnings releases, and geopolitical worries emanating from the Middle East as all playing a role in reversing equity sentiment. US economic data was mixed but definitively continues to point to a slowdown in Q1 economic activity. The momentum technology and biotech stocks saw a few bouts of selling which garnered attention as they did on a couple of occasions in 2014. There were glimmers of hope in Europe. Measures of confidence among German businesses and consumers saw surprising improvements, while other European nations also saw an uptick in confidence surveys. German and euro zone March preliminary services and manufacturing PMIs surveys beat expectations and rose further into expansion territory. In Asia, China’s March HSBC PMI manufacturing survey slipped to an 11-month low amid wider unease about the nation’s economy. Chinese officials continue to talk down growth expectations, with Vice Premier Zhang saying China has “paid a price” for very high growth and that high growth levels are “not sustainable.” For the week, the DJIA fell 2.3%, the S&P500 lost 2.2% and the Nasdaq dropped 2.7%.

Just before markets closed on Friday, Fed Chair Yellen reiterated that rates are likely to rise this year, but that the path of rates is more important than the timing of rate lift off. She again mentioned that the dollar strength will impact US exports, but said that the currency market has to be put in context, and that other factors like robust consumer spending and foreign central bank stimulus will help the US economy.

Other Fed speakers this week also reiterated that the June, July and September Fed meetings would be live for possible rate hikes. Fed Vice Chair Stanley Fischer said the FOMC would “eventually raise rates by 25 basis points,” jesting that this would take Fed policy from “ultra-accommodative” to “extremely accommodative”.

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