Weekly Market Wrap 14/04/2023

US CPI data offered little surprises for investors, whilst US jobs data hints at a potential turning point in the US economy. UK GDP data disappoints, and German figures offer an upside surprise.

UK Market 

The UK market ended the week up. UK GDP data released this week showed that the UK economy failed to grow in February as public service worker strikes caused productivity to fall. The ONS revised its estimate for January’s GDP growth, meaning that the UK is likely to avoid an economic contraction in Q1 of 2023. UK CPI data will be released next week, with inflation expected to fall to 9.8% after unexpectedly increasing to 10.4% in February.

US Markets

The S&P 500 is currently ending the week up 1.00% at 4,146 and the NASDAQ is 0.36% higher at 13,109. US CPI data came in broadly in line with expectations this week, headline inflation fell to 5.0% YoY, whilst core inflation rose slightly to 5.6%. The continued high levels of core inflation mean the Federal Reserve is expected to continue raising rates, with a 25bps hike currently priced in by markets. US Initial jobless claims increased by more than expected this week, coming in at 239k (est. 232k) signaling that the US economy may be beginning to feel the affects of rapid interest rate increases seen over the previous year.

European Markets 

The Euro Stoxx 50 is currently up 1.68% at 4,382, the DAX is 1.28% higher at 15,98, whilst the CAC 40 has gained 2.47% to 7,505. The German economy is expected to narrowly avoid a recession with estimates now predicting 0.3% growth this year, with recent increases in industrial and construction output boosting productivity.

Fixed Income

Yields on 10-Year US government bonds rose slightly this week, reaching 3.43%. In line with expectation, inflation figures have left interest rate estimates unchanged in the US, with the Fed expected to raise by 25bps at its next meeting in early May.

Commodities

Brent Crude was steady this week at $85 per barrel after OPEC+ unexpectedly cut production last week.

The Week Ahead 

Monday – Italy CPI Data

Tuesday – China GDP

Wednesday – UK CPI

Thursday – US Initial Jobless Claims

Friday – UK Retail Sales

*Price changes as of last week’s close unless stated otherwise.