WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Major stock market indices had a mixed performance, with value stocks taking the lead, boosted by a rise in U.S. benchmark West Texas Intermediate oil prices, surpassing $90 a barrel for the first time since November 2022. Large-cap stocks outperformed small-cap stocks. However, the technology and growth sectors lagged, after Apple’s product launch event, and the iPhone 15 price increase was met with mixed reviews, leading to subdued sentiment toward the tech sector throughout the week. In Europe, the STOXX Europe 600 Index closed 1.60% higher, helped by the European Central Bank’s decision to raise interest rates, even as it suggested that borrowing costs might have peaked. Positive economic data from China also contributed to improved investor sentiment. Germany’s DAX gained 0.94%, and the UK’s FTSE 100 Index rose 3.12%, benefiting from the weakening of the British pound against the U.S. dollar, which supports the index due to the significant foreign revenue generated by its multinational constituent companies.
US30 +0.12% |
US100 -0.51% |
US500 -1.22% |
GER40 +0.56% |
Oil prices reached a 10-month high, marking their third consecutive weekly gain. This increase is driven by a combination of factors, including production cuts in Saudi Arabia, optimism regarding Chinese demand, and supply concerns. Brent crude settled at $93.93 a barrel, up 0.3%, while U.S. West Texas Intermediate closed at $90.77, up 0.7%, both reaching their highest levels in 10 months and posting a 4% weekly gain. These prices are on track for their biggest quarterly increase since the first quarter of 2022. Extended supply cuts by Saudi Arabia and Russia, strong Chinese industrial and retail data, and expectations of reduced U.S. oil output are the main drivers of this price surge. Despite a slight increase in the number of U.S. oil rigs, it remains significantly lower than last year.
Gold +0.31% |
Silver +0.51% |
BRENT +3.77% |
NATGAS +1.27% |
The U.S. dollar traded lower on Friday on weakening consumer sentiment but was still set for a ninth consecutive week of gains. The yen weakened to a 10-month low. The University of Michigan’s Consumer Sentiment Index fell to 67.7 this month, below expectations, although consumers saw lower inflation. Although economic data does not point to a recession, market expectations suggest lower interest rates in the future, which has supported the dollar. The Federal Reserve is expected to keep rates unchanged at its upcoming policy meeting. The U.S. Dollar Index fell slightly at 105.32 but was on track for its ninth straight weekly gain. The euro recovered slightly following the ECB’s rate hike announcement but was still on track for its ninth consecutive weekly decline. Sterling also fell ahead of the Bank of England’s policy announcement next week.
EUR/USD -0.39% |
USD/JPY +0.01% |
GBP/USD -0.65% |
USD/CAD -0.84% |
Bitcoin has surpassed Visa in annual transaction volume, a significant milestone, considering Bitcoin’s decentralized nature and global usage compared to Visa. However, the term “transaction volume” can be misleading as a significant portion of Bitcoin’s recent activity came from high-frequency transactions using protocols like Ordinals. Comparing Visa and Bitcoin in terms of transactions is tricky because they serve different purposes and are subject to different rules.
BTC +2.81% |
ETH +0.58% |
LTCUSD +5.26% |
XMRUSD +2.97% |
UK: The UK economy contracted at a faster rate than expected in July, mainly due to worker strikes, adverse weather conditions, and rising borrowing costs, according to the Office for National Statistics. GDP declined by 0.5% sequentially after a similar increase in June. Nevertheless, the three-month rolling growth rate recorded an increase of 0.2%, driven by expansions in the services, production, and construction sectors.
UK unemployment unexpectedly rose to 4.3% in the three months ending in July, compared with 4.2% in the previous three months. This surpassed the Bank of England’s forecast of 4.1% for the third quarter. However, year-on-year total wage growth accelerated to a higher-than-expected 8.5% over the same three-month period.
EU: The European Central Bank (ECB) has raised interest rates for the tenth consecutive time, suggesting it may be nearing the end of its monetary tightening campaign. ECB President Christine Lagarde noted strong support from policymakers for the quarter-point rate hike, pushing the key deposit rate to a record high of 4.0%. The ECB stated that this move would substantially contribute to achieving its inflation target if maintained over an extended period of time.
Eurozone industrial production data from the European Union’s statistics office revealed a larger-than-expected 1.1% sequential decline in July, mainly due to sharp declines in the production of durable consumer and capital goods.
The European Commission (EC) has revised its forecast for eurozone GDP growth in 2023 from 1.1% to 0.8% and projected a 0.4% contraction in the German economy, the largest in the eurozone, compared to the previous estimate of 0.2% growth.
US: The highly anticipated August Consumer Price Index (CPI) data released on Wednesday showed progress in the Federal Reserve’s fight against inflation, but rising energy prices could lead to further monetary policy tightening. The headline CPI numbers pointed to the largest monthly increase since August 2022, driven by expected higher gasoline prices. The core CPI, excluding food and energy, rose slightly more than anticipated, but market reactions were muted.
Additionally, the August Producer Price Index (PPI) data showed headline producer prices rose more than expected, with core PPI in line with expectations. Robust retail sales for August demonstrated ongoing consumer willingness to spend.
Overall, the week’s economic data did not significantly alter market expectations for whether the Fed will maintain interest rates during its September 19-20 policy meeting. This data reinforced the prospect for a soft landing scenario in which inflation cools to the Fed’s target without triggering a severe recession. The Chicago Board Options Exchange Volatility Index (VIX), a widely followed market volatility gauge, hit its lowest level since the lowest level of the start of the pandemic in early 2020.
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