The FTSE 100 performed well last week thanks in part to a bout of Sterling weakness. Having moved above $1.30 back in July, Sterling slipped below $1.24 last week as concerns regarding the strength of the economy weighed on the currency. Weak GDP covering July pointed towards an economy in reverse with recent Bank of England (BoE) rate hikes impacting the economy more than expected[1]. And whilst the BoE is likely to lift rates again at this week’s policy meeting, there is a growing expectation that it could be the final one in this cycle. The domestic main market jumped by +3.1%, the mid-cap centric FTSE 250 added +1.8% whilst gilt yields inched lower across the curve.

US equities concluded the week modestly lower with the S&P500 and NASDAQ falling by -0.2% and -0.4% respectively. This reflected outperformance by value names with higher oil prices supportive of energy stocks. In Europe, the MSCI Europe ex UK index rose by +1.2%, helped in part by the European Central Bank which hinted that peak rates may have been reached[2]. Elsewhere, Japanese equities enjoyed a strong week with the Nikkei 225 making a +2.8% gain with support coming from further weakness in the Yen whilst in China, the Shanghai Composite was flat.

Moving to commodities and as flagged above, oil prices continued to rise last week. Brent crude rose by an additional +3.7% to $94.05 a barrel with some analysts expecting to see the return of $100 before the end of the year. Copper rose by +1.5% to $8,350 a tonne whilst gold added +0.3% to $1,928 an ounce. Whilst a higher dollar is a headwind for the precious metal, safe haven buying ahead of this week’s monetary policy meetings in both the US and the UK provided some support.

Week Ahead

Source: Refinitiv Workspace, 18/09/23

[1] ONS – Monthly GDP Estimate July 2023, 18/09/23

[2] T. Rowe Price – Global markets Weekly Update, 18/09/23

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