Nov 3, 2023 12:47:36 PM
Weekly Market Wrap 03/11/2023
Investors were encouraged in their belief that interest rates had reached their peak, as recent decisions by the Federal Reserve, Bank of England, European Central Bank, and other central banks indicated a stance of maintaining current rates.
The UK market ended the week higher. The Bank of England decided not to raise UK rates further at the bank’s November meeting, with members voting 6-3 in favour of keeping rates unchanged at 5.25%. BoE Governor Andrew Bailey stressed that further rate hikes would be delivered if necessary and that the UK would need to see inflation fall significantly before rate cuts could be considered. The market is not pricing in any further rate hikes for the BoE, with the first cut expected in August 2024.
The S&P 500 is currently up 4.87% this week, whilst the Nasdaq is set to end the week 5.21% higher.
The Fed left US rates unchanged at 5.25-5.50% but noted a ‘long way to go’ in the battle against inflation. Economic data continues to be above expectations and investors await a significant employment report later today to gain further insights into the direction of interest rates. Major US companies’ earnings filled the headlines, with Apple notably disappointing on revenue, particularly from iPhones.
The Euro Stoxx 50 is currently 2.74% higher this week.
Auto stocks led as European markets were boosted by optimism regarding a potential conclusion to monetary policy tightening by major central banks. Data released showed German exports fell more than expected in September as weak global demand hurt exports.
Yields on US 10-year bonds fell by 16 basis points this week to 4.66%, after it was announced that increases in treasury supplies would be smaller than expected.
Brent crude fell by 4.17% this week, rising to $86.71 as concerns over the escalation of conflict in the middle east subsided.
The Week Ahead
Monday – German Factory Orders
Tuesday – European PPI
Wednesday – European Retail Sales
Thursday – US Initial Jobless Claims
Friday – UK GDP
*x% up/down to price as of last week’s close