Global equity markets maintained their upwards momentum last week, fuelled by comments from Federal Reserve (Fed) Chairman Jerome Powell. Whilst the Fed did raise interest rates once again at Wednesday’s policy meeting, it was Powell’s acknowledgement that inflationary pressures were starting to abate that buoyed traders [1]. The S&P500 ended the week +1.6% higher with tech focused NASDAQ jumping by +3.3% helped by a surge in the likes of Meta Platforms which rallied on the back of better than expected results [2].

The European Central Bank (ECB) also hiked rates last week with the base rate raised by a further 50 basis points (bps) to 2.5%. That did little to dent the growing optimism amongst equity investors with the MSCI Europe ex UK index rising by +1.8% with German and French stocks particularly strong. Across the Channel, the FTSE100 and FTSE250 rose by +1.8% and +2.8% respectively after the Bank of England (BoE) lifted its own base rate by half a point to 4.0%. Gilt yields fell sharply across the curve with investors hopeful that the BoE’s rate hiking cycle was close to reaching its conclusion. Elsewhere, the Nikkei 225 index in Japan added +0.5% whilst the Shanghai Composite concluded the week broadly unchanged.

Moving to commodity markets, oil prices slumped sharply with Brent Crude falling by -7.7% to $80.00 a barrel amid growing US inventory and concerns relating to the global growth outlook. Metal prices also slumped, copper declining to $8,951 a tonne after a weekly decline of -3.2%. Expectations that China’s reopening from strict COVID restrictions would fuel a surge in demand helped lift commodity prices across the board initially although the subsequent uptick in demand has failed to materialise just yet. As for gold, the precious metal retreated by -3.0% to $1,870 an ounce, a three week low following a strong labour market report in the US on Friday. [3]

Week Ahead

Q4’22 GDP is the standout data due from the UK this week with expectations for flat economic growth during the quarter. Other domestic figures to keep an eye on include industrial and manufacturing production in addition to monthly retail sales from the British Retail Consortium. Moving to the Eurozone, retail sales and industrial production are released throughout the week whilst the European Union publishes it quarterly economic forecasts on Thursday. In China, inflation data covering both consumer and producer indices are released on Friday, the former of which is expected to have jumped to 2.2% last month. It’s a somewhat quiet week for headline US data with the closely monitored consumer sentiment indicator from the University of Michigan amongst the only key figure due. There are no major economic figures released in Japan this week. [4]

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[1] T. Rowe Price, 06/02/23

[2] Meta Investor Relations, 06/02/23

[3] Refinitiv, 06/02/23

[4] Forex Factory, 06/02/23

SJP Approved 06/02/23