European equities recorded their worst week for nearly four months, reflective of hawkish comments from the European Central Bank (ECB) and concerns relating to the state of the economy. Despite the recent retreat in the rate of inflation, ECB President Christine Lagarde retained her hawkish stance in comments made last week, stating that the Bank has further work to do to get inflation back down to its 2.0% target[1]. Meanwhile, economic data from Europe’s largest economy Germany showed decreasing industrial output during May with exports surprisingly shrinking[2]. The MSCI Europe ex UK declined by -3.1% with European government bond yields rising.
It wasn’t just on mainland Europe where equities lost ground. In the UK, the FTSE 100 shed -3.7% as it continued to contend with interest rate nerves. Gilt yields rose across the curve with the closely monitored 10-year government security rising by 26 basis points (bps) to 4.65%. Moves in the US were somewhat more muted in what was a holiday shortened trading week. The S&P 500 fell by -1.2% with the release of the minutes from the Federal Reserve’s most recent monetary policy meeting weighing on investor sentiment. In Asia, the Japanese Nikkei 225 declined by -2.4% as it pulled back from its recent three decade high, whilst in China, the Shanghai Composite retreated by -0.2% on the back of deteriorating Purchasing Manager Index (PMI) data.
Elsewhere, supply concerns continued to weigh on oil prices with Brent Crude jumping by +5.4% to $78.56 a barrel. As previously flagged, production cuts from Saudi Arabia and dwindling US inventories have been supportive of prices in recent weeks. Gold recorded its first weekly gain for a month thanks to a Friday rally with the precious metal rising on the back of weaker than expected nonfarm payrolls data in the US.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | China | Consumer Price Index YoY | June | 0.20% | 0.20% |
| China | Producer Price Index YoY | June | -5.00% | -4.60% | |
| Tuesday | UK | British Retail Consortium Retail Sales YoY | June | - | 3.70% |
| UK | Unemployment Rate | May | 3.80% | 3.80% | |
| Wednesday | US | Consumer Price Index YoY | May | 3.10% | 4.00% |
| Thursday | Eurozone | Industrial Production MoM | May | 0.30% | 1.00% |
| UK | GDP MoM | May | -0.40% | 0.20% | |
| UK | Industrial Production MoM | May | -0.40% | -0.30% | |
| US | Producer Price Index YoY | June | 0.40% | 1.10% | |
| Friday | US | University of Michigan Consumer Sentiment | July | 65.50 | 64.40 |
Source: Refinitiv Workspace, 10/07/23
Past performance is not indicative of future performance.
The value of an investment may fall as well as rise. You may get back less than the amount invested.
The value of investments may fall as well as rise purely on account of exchange rate fluctuations.
© S&P Dow Jones LLC 2023. All rights reserved
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2023. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.
The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.
Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.
Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.
[1] T. Rowe Price, 10/07/23
[2] Destatis, 10/07/23
SJP Approved 10/07/2023