It was another strong week for global equities as below forecast inflation data on both sides of the Atlantic underpinned strong buying momentum. US Consumer Price Index (CPI) inflation slowed to 3.2% during October, half a percentage point below the prior month and a 10 basis point (bp) undershoot against forecasts[1]. The rate of inflation also retreated in the UK where headline CPI dropped from 6.7% in September to 4.6% last month, again a figure below market expectations (forecast: 4.8%)[2]. This added to the growing anticipation that the Bank of England (BoE) and Federal Reserve (Fed) have reached the end of their respective interest rate hike cycles given the current inflation direction of travel.

The S&P 500 and the NASDAQ both added more than +2.0% with small cap indices in the US also performing strongly. It was a similar story in the UK, the FTSE 100 rising by +2.0% and the FTSE 250 by an impressive +4.0%, the latter also benefiting from upwards momentum in Sterling. Elsewhere, European equities also advanced with the MSCI Europe ex UK ending the week +3.0% higher in local currency terms. The Nikkei 225 in Japan also made strong gains (+3.1%) with investors prepared to look through a below forecast third quarter GDP print. As for China, the Shanghai Composite rose by a more modest +0.5%, reflective of mixed economic data with solid retail sales and industrial production numbers offset to a degree by slowing fixed asset investment[3].

Moving to commodities, oil prices rallied strongly on Friday although it wasn’t enough to prevent an overall weekly decline. Brent crude ended the week -1.1% lower at $80.67 a barrel, a fourth straight week-on-week decline despite jumping by more than +3.0% on Friday alone. A combination of traders closing out previous short positions on oil and new US sanctions on several Russian oil shippers underpinned Friday’s uptick. As for gold, the precious metal benefitted from some weakness in the US Dollar to record a weekly gain of +1.8% to $1,981 an ounce.

Week Ahead

Source: Refinitiv Workspace, 20/11/23

[1] Bureau of Labor Statistics – CPI Inflation, October 2023

[2] ONS – CPI Inflation, 20/11/23

[3] T. Rowe Price – Global Markets Weekly Update, 17/11/23

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