The S&P 500 Index closed the week with four consecutive days of gains, pushing it through the 5,000 level for the first time to another record high. The Nasdaq 100 and MSCI World index also hit record highs, a feat already managed by Germany’s Dax earlier in the week which surpassed its own high on Tuesday.

Gains in the US however remained relatively narrow, evidenced by the equally weighted version of the index lagging significantly.  With most earnings reports for many of the bigger constituent stocks now released, investor focus returned to economic data last week with the ISM (Institute for Supply Management) Services index reporting last Monday.  The US services sector rebounded in January according to the index which gauges business activity. The non-manufacturing index rose to 53.4 in January from 50.5 in December, with the new orders sub-index rising to 55 from 52.8. However, a notable jump in the price sub-index to 64 from 56.7 added cause for concern regarding inflation. 

US Federal Reserve Chair Jerome Powell also quelled any hopes of a rate cut at the Federal Reserve’s March meeting.  He reiterated expectations the Fed will cut about three times this year which is consistent with the December Summary of Economic Projections published by the central bank. The market has dialled back its rate cut expectations but still has almost five quarter-point cuts priced by the end of the year, down from nearly seven a month ago. Meanwhile, the US Treasury Department’s record $42 billion auction of 10-year notes helped to calm fears that the government’s record borrowing levels would push borrowing costs higher. For the week, the yield on the US 10-year Treasury note rose 15 basis points to 4.17% at Friday’s close.

Elsewhere, the Shanghai Composite Index gained 4.97% ahead of the Lunar New Year holiday period. Stocks in China rallied as the government’s latest raft of stimulus measures offset concerns about deepening deflation.  Japan’s Nikkei 225 index rose 2.04% and the broader TOPIX Index was up 0.7% for the week, rising on yen weakness amid further speculation of a Bank of Japan shift away from their yield curve control policy.  Continental European markets closed the week with modest gains, whilst the UK’s FTSE 100 lost -0.52% despite some stronger readings of both the UK labour market and increased activity in the Services sector.

In commodities, the price of a barrel of West Texas Intermediate crude oil rose more than $4 to $76.52 at Friday’s close as hopes of a cease-fire between Israel and Hamas faded.

Week Ahead

Source: Refinitiv Workspace, 12/02/24

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.

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.

© S&P Dow Jones LLC 2023. All rights reserved

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.

SJP Approved 12/02/2024