It was a fairly quiet week in the US, with earnings season nearing its close and trading light ahead of the Labor Day weekend. Nvidia’s quarterly earnings report was the standout release, with the stock trading down 8% on the week despite beating expectations, with investors seemingly unimpressed by only a modest raise in guidance and limited reassurance that its next-gen AI chips would meet production targets. This dragged the technology sector down, and it was the only major sector in the red by the week’s close.

The S&P 500 rose 0.63% on the week (price in sterling terms), concluding August with its fourth consecutive monthly gain, while the tech-heavy NASDAQ fell -0.55%. Friday brought comforting news to markets, as the core personal consumption expenditures price index – a key inflation metric for the Federal Reserve – came in a touch lower than expected, at an annual rate of 2.6%, within sight of the 2% target. Core inflation, which strips out volatile inputs such as food and energy, has proven stickier than hoped, as services inflation has followed the rise in real wages.

Elsewhere, markets posted gains in the UK, Europe, Japan and China. Europe also welcomed positive news on inflation, as the headline Eurozone CPI rate fell to 2.2%, its lowest level in three years. This helped the MSCI Europe ex UK gain 0.78% (price in sterling terms) during the week. This was all but matched by the FTSE 100, which rose 0.58%. The Nikkei 225 continued to recover from August’s flash crash, posting a rise of 0.80%, as the Bank of Japan’s hawkish stance was corroborated by a 2.4% annual inflation figure from the Tokyo CPI print, ahead of the 2.2% consensus expectation.

In other markets, Brent Crude ticked down to $78.89 a barrel, with the modest fall masking a highly volatile week, as demand concerns – particularly related to the US and China – were weighed against supply issues in Libya. Sovereign bond yields ticked higher, with the US 10-yr Treasury yield increasing by 11bps to 3.92%, while the UK 10-yr Gilt yield rose by a similar margin to 4.02%.

Week Ahead

Source: Refinitiv Workspace, 02/09/24

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