Global equity markets lost ground last week as hawkish rate forecasts from the Federal Reserve (Fed) weighed on investor sentiment. The Fed hosted its latest policy meeting on Wednesday and whilst it did leave interest rates unchanged, its outlook for rates next year and in 2025 was higher than expected. The prospect of prolonged elevated rates pushed treasury yields upwards with the 10-year security hitting a 16 year high before closing the week 10 basis points higher at 4.43%. The S&P 500 and NASDAQ sold off sharply, the former by -3.0% and the latter by -3.6% with S&P posting its third consecutive negative week[1].

European equity markets also lost ground with weak economic an additional headwind to those rate concerns. The MSCI Europe ex UK index shed -2.1% whilst the FTSE 100 lost -0.4%. UK markets did take some comfort from the Bank of England (BoE) leaving its own base rate unchanged at last week’s policy meeting although Governor Andrew Bailey did flag that rates will rise again if persistent inflationary pressures remain. The decision to hold firm came after surprise inflation data on Tuesday which showed CPI slowing faster than forecast[2]. In Japan, the Nikkei 225 retreated by -3.4% with the Yen continuing to weaken whilst in China, the Shanghai Composite added +0.5%. The increase there came on the back of growing optimism regarding the economy following the prior week’s positive industrial production and retail sales figures.

Moving to commodities, oil prices paused for breath after their meteoric recent rise. Brent crude concluded the week at $93.34 a barrel, a -0.8% weekly decline although they remain circa +10.0% higher over the past three weeks alone. Copper prices also lost ground with the metal falling by -2.3% a tonne, reflecting a significant uptick in inventory levels. As for gold, the precious metal was flat at $1,927 an ounce.

Week Ahead

Source: Refinitiv Workspace, 25/09/23

[1] T. Rowe Price – Global Markets Weekly Update 22/09/23, 25/09/23

[2] ONS – CPI Inflation August 2023, 25/09/23

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