Equity markets advanced strongly last week, buoyed by slowing US inflation and growing hopes that interest rates may peak shortly. The latest CPI inflation data print showed price rises slowing to an annualised +3.0% during June, a percentage point below the prior month and figure below market expectations[1]. The S&P 500 rose by +2.4% to move it within touching distance of its record level which was set early last year. Treasury yields meanwhile retreated sharply, the 10-year security seeing its yield fall by 24 basis points (bps) to 3.82% over the course of the week.
Strong gains were also seen in Europe last week, the MSCI Europe ex UK index and FTSE100 climbing by +3.2% and +2.5% respectively. Sovereign yields also tumbled, albeit not to the same magnitude as their American counterparts. The 10-year UK gilt yield declined by 21bps to 4.45% whilst the equivalent duration benchmark yield on the Continent fell by 16bps to 2.48%. Looking at Asia, the Shanghai Composite in China added +1.3% on growing expectations of additional stimulus from Beijing at this month’s Politburo meeting. Japanese equities were flat, lagging their Asian peers during the week.
In the commodities market, oil prices continued to grind higher with Brent Crude posting a weekly advance of +1.7% to $79.89 a barrel. It was a third consecutive weekly gain for crude with prices aided by the weakening inflationary picture in the US and ongoing production cuts by OPEC+. Copper prices also rallied strongly despite concerns relating to the strength of the Chinese economy. The metal jumped by +3.6% to $8,662 a tonne, with prices underpinned by further weakness in the US Dollar. Gold prices benefitted from lower future US interest rate expectations to record a gain of +1.5% which left the precious metal at $1,959 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, 17/07/23
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[1] Bureau of Labor Statistics – CPI Inflation June 2023, 17/07/23
SJP Approved 17/07/2023