Dec 11, 2023 10:38:38 AM
Weekly Market Wrap 11/12/2023
US jobs data surprised investors this week, causing markets to reconsider economic and interest rate expectations. European retail sales data continued to paint a gloomy picture for the region, ahead of the ECB’s final meeting of 2023. Key US CPI data will be released on Tuesday, if a key upside or downside surprise is seen, this could shift market sentiment for the remainder of 2023.
The UK market ended the week higher. The Bank of England will meet for the final time in 2023 in the coming week, at present, markets are pricing in a 99% chance of rates being held at current levels.
The S&P 500 ended the week 0.21% higher, whilst the Nasdaq ended the week 0.54% higher. Much anticipated US non-farm payrolls data on Friday came in higher than expected, with 199,000 jobs added when economists had forecast 180,000. US unemployment also fell unexpectedly to 3.7%, when a figure of 3.9% was forecast. This jobs report received a mixed reaction from markets as a lower unemployment rate helped to calm fears that the economy was on the verge of recession, however the data also reduced expectations that rate cuts could be seen from the Fed in the near future.
The Euro Stoxx 50 ended the week 2.37% higher. European retail sales data came in slightly below expectations, rising by 0.1% when an increase of 0.2% MoM had been expected. This translated to a fall of 1.2% YoY, driven lower sales in fuel, food, and drinks. The European Central Bank is scheduled to meet for the final time in 2023 on Thursday 14th of December, where it is widely expected that rates will be held at the current deposit rate of 4.00%. Rate cuts for the ECB are priced in for as early as March 2024 as investors keep an eye on economic conditions in the Euro Zone.
Yields on US 10-year bonds were flat across the week, with yields at 4.23% as markets continue to price in rates cuts for the Fed in 2024.
Brent crude fell by 3.85% ending the at $75.8 per barrel, driven lower by continued concerns around demand from China and India.
The Week Ahead
Tuesday – UK Unemployment, US CPI
Wednesday – Fed Rate Decision
Thursday – BoE & ECB Rate Decisions
Friday – China Retail Sales
*x% up/down to price as of last week’s close