Weekly Market Wrap 26/08/2022

All eyes turn to Jackson Hole as financial leaders from around the world gather for the economic symposium. 

US inflation and consumer spending slowed, as China and US sign an agreement on their long-running audit dispute. 

UK household energy bills are set to jump 80% to an average of £3,549 per year from October. Ukraine claimed they narrowly escaped a nuclear catastrophe as plant loses power on Friday. 

US Markets 

The S&P 500 is currently ending the week down 0.69% at 4,199 and the NASDAQ is down 0.75% at 13,144.  

All eyes turn to Jackson Hole as financial leaders from around the world gather for the economic symposium. the Fed has shifted from looking to avoid a recession, to downplaying the significance of one, in the context of the worst inflationary outlook for 40 years.  

US inflation showed signs of slowing as US consumer spending missed expectations, giving the Fed some leeway in their interest rate decisions should inflation continue to moderate. 

China and US signed a landmark agreement on their audit dispute which marks a major thaw in US-China relations. 

UK Market   

The UK market fell this week as UK household energy bills are set to jump 80% to an average of £3,549 per year from October. Such a move is likely to push millions of households into poverty and put huge strain on businesses unless the government steps in.

European Markets   

The Euro Stoxx 50 fell 1.16% to 3,688, the DAX was down 1.64% at 13,324 whilst the CAC 40 lost 1.55%, reaching 6,395. Markets focussed on the Italian election as all three leading parties made costly manifesto promises with little indication on how to finance them. Markets were already on alert with public debt at roughly 150% of GDP. 

Fixed Income  

Yields on the US 10-Year Treasury rose to 3.02%, as all eyes turned to Jackson Hole.

Commodities 

Brent Crude rose 3.29% this week as better-than-expected figures from the US calmed recession fears. More OPEC+ backed Saudi Arabia’s position which included targeted production cuts where necessary to keep the price above $90. 

The Week Ahead   

Monday –  

Tuesday – German CPI 

Wednesday – China Manufacturing PMI, EUR HICP, US Employment 

Thursday – German Retail sales 

Friday – US Nonfarm payrolls

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