It was the UK’s turn to benefit from accelerating disinflation last week as the latest CPI print showed headline CPI falling to 7.9% during June[1]. May’s reading had been a disappointment with the index stubbornly high at 8.7%[2] but a 90 basis point fall this time around left local equity markets in jubilant mood. The reading undershot expectations by half a percentage point whilst core-CPI, a measure which excludes energy and food from the calculation also cooled. The FTSE100 and FTSE250 spiked by +3.1% and +3.4% respectively whilst gilt yields retreated sharply, particularly at the short end of the curve with the 2-year gilt seeing its yield fall by 27bps to 4.98%. Sterling also pulled back on hopes of slower Bank of England rate hikes at its coming policy meetings.
Elsewhere, equity markets were more mixed. In the US, the S&P500 added +0.7% although the technology dominated NASDAQ fell by -0.6% with value stocks outperforming last week[3]. European bourses advanced modestly, the MSCI Europe ex UK index rising by +0.6% with German and French equities making steady gains. Asian equities lost ground meanwhile, the Japanese Nikkei 225 declining by -0.3% ahead of this week’s central bank meeting whilst the Chinese Shanghai Composite shed -2.2%. The latter reflected weaker than expected economic growth during the second quarter.
Moving to commodities, oil prices benefited from a Friday rally to record a fourth straight weekly gain. Brent Crude concluded the week +1.5% higher at $81 a barrel on growing concerns relating to future supply. Copper came under pressure, the metal falling by -2.8% to $8,423 a tonne on the back of the disappointing GDP print published in China. Gold was largely flat at $1,961 an ounce.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | China | GDP YoY | Q2'23 | 7.30% | 4.50% |
| Industrial Production YoY | June | 2.70% | 3.50% | ||
| Retail Sales YoY | June | 3.20% | 12.70% | ||
| Tuesday | US | Industrial Production MoM | June | 0.10% | -0.20% |
| Retail Sales MoM | June | 0.40% | 0.30% | ||
| Wednesday | Eurozone | Final CPI YoY | June | 5.50% | 5.50% |
| UK | CPI YoY | June | 8.20% | 8.70% | |
| US | Building Permits | June | 1.51m | 1.50m | |
| Housing Starts | June | 1.48m | 1.63m | ||
| Thursday | US | Existing Home Sales | June | 4.22m | 4.30m |
| Friday | Japan | Core CPI YoY | June | 3.30% | 3.20% |
| UK | Retail Sales MoM | June | 0.20% | 0.30% |
Source: Refinitiv Workspace, 24/07/23
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[1] ONS – CPI Inflation June 2023, 24/07/23
[2] ONS – CPI Inflation May 2023, 24/07/23
[3] T. Rowe Price – Global Markets Weekly Update, 24/07/23
SJP Approved 24/07/2023