Weekly Market Wrap 15/09/2023

The European Central Bank surprised investors with its latest monetary policy decision this week, whilst a mixed bag of US economic data boosted equity markets. Brent crude continues to push higher, whilst yields rise in the US.

UK Market  

The UK market ended the week higher. UK mining stocks rallied on Friday morning after Chinese industrial output data came in higher than economists had expected (4.5% vs 3.9%est). UK public inflation expectations rose very slightly in August, to 3.6% from 3.5%, whilst expectations for 5 years ahead showed expectations of 2.9%.

US Markets

The S&P 500 is currently 1.07% higher this week, whilst the Nasdaq is set to end the week 1.27% lower. This week marked the much anticipated IPO of SoftBank’s Arm Holdings, the UK based semiconductor company which listed on the Nasdaq. Arm gained almost 25% on its first day of trading. US markets rallied on Thursday, with equities finding themselves in the rare scenario of being boosted by positive economic data. Initial jobless claims came in lower than expected, whilst retail sales for August surprised to the upside, free from the fear of potential further hikes from the Federal Reserve, the data eased investors’ fears over a potential recession.

European Markets 

The Euro Stoxx 50 is currently 2.06% higher this week. The European Central Bank surprised economists this week, unexpectedly raising interest rates in Europe by 0.25%. Despite a small majority of economists believing that the ECB would pause rate hikes at this meeting, the central bank decided that a further increase was needed. Despite the unexpected increase, the reaction of equity markets was positive, as the ECB signalled that this hike was likely to be the last of this cycle.

Fixed Income

Yields on US 10-year bonds rose this week by 0.07% to 4.32% this week, rising on Thursday after US PPI data came in at 1.6% YoY, ahead of analyst consensus of 1.2%.

Commodities

Brent crude rallied 3.60% this week, rising to $93.91 per barrel, boosted by hopes of stronger demand in the Chinese economy after retail sales grew by more than expected in August (4.6% vs 3.0%est). Prices were also boosted by Saudi Arabian production cuts.

The Week Ahead

Monday –  

Tuesday – Canada CPI

Wednesday – UK CPI, Fed Interest Rate Decision

Thursday – BoE Interest Rate Decision

Friday – UK Retail Sales

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