Weekly Market Wrap 02/12/2022

The Fed Chairman commits to “getting the job done” but confirms slower rate hikes are on the horizon providing some relief for investors. Data from Europe and the US suggested inflation was cooling, optimism towards the economic reopening in China helped spur global equity markets. 

Kristalina Georgieva, managing director of the IMF has warned of “exceptional” uncertainty due to the combined effects of China’s zero-Covid policy and Russia’s war in Ukraine. Easing of Covid-19 testing in some Chinese cities on Friday were met with a combination of relief and concern as hundreds of millions await an expected shift in national virus policies following widespread social unrest. 

UK Market   

The UK market ended the week positive.  

A recent report from the LSE estimated Brexit added c.£210 to the average food bill (6% increase overall) as the effects of the UK’s decision to leave the EU once again start to permeate the national conversation. The government is set to miss its target for securing post-Brexit trade agreements, as figures show a 15% fall in the number of UK exporters. 

UK house prices fell by 1.4% in November, the fastest pace since June 2020. This follows a 0.9% fall in October, as the market cools following very strong growth seen since the outset of the Covid-19 pandemic. 

US Markets 

The S&P 500 is currently ending the week up 1.22% at 4,077 and the NASDAQ up 2.43% at 12,041.90.  

Investors await US jobs reports as US job growth was likely the smallest in nearly two years in November as mounting worries of a recession cooled demand for labour, which would add to the case for allowing the Federal Reserve to start slowing the pace of its interest rate hikes this month. 

European Markets  

The Euro Stoxx 50 is currently up 0.64% to 3988, the DAX flat at 14,521 whilst the CAC 40 gained 0.45%, reaching 6,743.  

Markets gained as data this week from Europe showing cooling inflation and falling German retail sales and exports have made the case for the European Central Bank to opt for a smaller hike. 

Fixed Income  

Yields on the US 10-Year continued to fall this week to 3.50%, as US inflation continued to show signs of easing and US job growth was likely the smallest in nearly two years in November. European data showed likewise, as global monetary tightening fears continued to ease. 

Commodities 

Brent Crude rose 3.73% this week to $86.75 per barrel, as OPEC+ prepared to meet on Sunday and an EU ban on Russian Oil comes into place next Monday. 

The Week Ahead   

Monday – Matt’s Birthday (gifts welcomed), Europe retail sales, US PMI 

Tuesday –  

Wednesday – Europe GDP, Japan GDP 

Thursday –  

Friday – China CPI, US Consumer Sentiment 

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