Weekly Market Wrap 08/01/24

Markets failed to continue the strong performance seen towards the end of 2023 at the start of the new trading year. US jobs data surprised investors, whilst European inflation data showed positive signs for the Euro zone economy. Investors are anxiously looking ahead to US CPI data set to be released on Thursday as the next major clue for Fed policy.

UK Market  

The UK market ended the week lower. Data released on Friday showed that UK house prices rose once again in December, rising 1.1% MoM, whilst an S&P construction PMI came in higher than expected at 46.8 (est. 46). A more positive interest rate outlook is likely the key driver of more transactions in the housebuilding sector.

US Markets

The S&P 500 ended the week 1.52% lower, whilst the Nasdaq ended the week 3.09% lower. FOMC minutes released on Wednesday showed that Fed officials anticipated rates in the US would remain at higher levels “for some time”, dashing hopes of further commentary on when the first rate cut could occur in 2024. Subsequent jobs data released on Thursday and Friday supported the view that the US economy is strong, with initial jobless claims coming in lower than expected (202k vs est 216k) on Thursday. Non-Farm Payrolls data released on Friday also came in higher than expected, showing more jobs were added than expected in December (216k vs est 170k), whilst unemployment remained at 3.7%, whilst an increase to 3.8% was forecast.

 European Markets 

The Euro Stoxx 50 ended the week 0.10% higher. Eurozone CPI for December was released on Friday, with headline inflation coming in slightly below expectations at 2.9% (est 3.0%), whilst core CPI came in in line with forecasts at 3.9% (down from 4.2% previously). Data released on Friday showed that producer prices in the Eurozone fell by more than expected, decreasing by 0.3% MoM and 8.8% YoY.

 Fixed Income

Yields on US 10-year bonds rose by 18 basis points across the week to 4.04%, with yield pushed higher by stronger than expected jobs data.  

 Commodities

Brent crude rose by 2.23% ending the week at $78.76 per barrel as concerns over the Israel-Gaza conflict spilling over into other nations in the Middle East remain high. 

The Week Ahead

Monday – Eurozone Retail Sales

Tuesday – Eurozone Unemployment

Wednesday – Fed’s Williams Speech

Thursday – US CPI & Initial Jobless Claims

Friday – US PPI Data

 *x% up/down to price as of last week’s close