WEEKLY MARKET RECAP
Your weekly global financial market newsletter
20 February 2023
- Investors weighed positive signals of growth and profit against concerns of unfavorable inflation trends, resulting in mixed results for major indexes. There were fears that the Federal Reserve would increase short-term interest rates more than expected, causing US Treasury yields to rise and the US dollar to appreciate. This had a particularly negative impact on oil prices and energy stocks due to the international pricing of oil in US dollars.
- Goldman Sachs and Bank of America increased their estimates for the number of times the US Federal Reserve will raise interest rates this year to three, based on data pointing to persistent inflation and a resilient labor market.
- In the Eurozone, employment reached a record high in the final quarter of last year, which could exacerbate concerns about second-round effects on inflation among ECB policymakers. Employment grew 0.4% to 165.07 million, the most since early 2021, and grew 1.5% year-over-year after a 1.8% increase in the third quarter
Indices
On Friday at the market closure, the weekly changes reported a slight weakening of the Dow Jones by -0.13%, on the other hand, Nasdaq strengthened by +0.43%, and lastly, the S&P also reported a light weakening by -0.28%. Investors expressed concerns about larger rate hikes by the Fed as bond yields and inflation reports rose. Yields on 10-year and 2-year US Treasury bonds reached November levels, causing negative sentiment. Producer prices hit a seven-month high in January, and new jobless claims unexpectedly decreased, indicating a hot labor market. Speeches from Federal Reserve officials supported the idea that the central bank will have to continue raising interest rates to cool the economy.
In Europe, the STOXX Europe 600 Index rose 1.40% for the week due to better-than-expected corporate results. France’s CAC 40 reached a record level earlier in the week and climbed 3.06%, while Italy’s FTSE MIB Index advanced 1.77%, and Germany’s DAX Index added 1.14%. The UK’s FTSE 100 hit an all-time high, gaining 1.55% with the help of a weaker British pound against the US dollar, which supported the index containing multinational companies with overseas revenues.
 |
US30 -0.13% |
|
US100 +0.43% |
|
US500 -0.28% |
 |
GER40 +1.14% |
Commodities
On Friday, the price of gold dropped to its weakest levels in six weeks, falling below $1,830 an ounce due to stronger-than-expected US economic data and hawkish statements from Federal Reserve officials. US producer prices increased 0.7% MoM in January, higher than market forecasts of 0.4%, and weekly jobless claims unexpectedly decreased. These reports, combined with robust retail sales data and a hotter-than-anticipated CPI reading, support the argument for further monetary tightening.
Meanwhile, the latest EIA report showed that US crude inventories increased by 16.283 million barrels to 842.973 million, the highest level since early October. Additionally, oil prices faced downward pressure after the US government announced plans to release 26 million barrels of oil from strategic reserves. However, the downside was limited by the IEA and OPEC raising their forecast for 2023 oil demand growth, citing higher consumption from China.
 |
Gold -1.19% |
 |
Silver -1.23% |
 |
BRENT -3.95% |
 |
NATGAS -9.94% |
Forex
The euro fell below $1.07, moving further away from the nine-month high of $1.1034 reached on February 2nd, however, the EURUSD market still closed +0.18% in favor of the euro. This occurred as investors flocked to the dollar, anticipating that the Federal Reserve would continue with its hawkish monetary policy for a longer period after the recent PPI report indicated that price pressures remain high in the US.
Similarly, the British pound dropped below $1.20, reaching its lowest level since January 5th, as investors also sought the dollar due to renewed expectations that the US Federal Reserve will maintain its aggressive monetary policy tightening. However, the softer-than-expected inflation rate in the UK eased the pressure for tightening from the Bank of England.
 |
EUR/USD +0.18% |
 |
USD/JPY +2.09% |
 |
GBP/USD -0.19% |
 |
USD/CAD +0.94% |
Macro
A rather busy week has passed by in terms of inflation data in the US and Eurozone. In January 2023, the US annual inflation rate only slightly slowed to 6.4%, down from 6.5% in December but higher than market expectations of 6.2%. This is the lowest reading since October 2021. The cost of used cars and trucks continued to decrease, while food prices also saw a slowdown. In contrast, energy and shelter costs increased, with gasoline prices rising by 1.5%. Fuel oil and electricity prices slowed down.
The UK’s annual inflation rate fell to 10.1% in January 2023, down from 10.5% in December and lower than market forecasts of 10.3%. The largest downward contribution to the decrease came from transport, restaurants and hotels, and slower price rises for food, clothing, and furniture. However, inflation accelerated for housing and utilities, recreation and culture, health, and alcoholic beverages and tobacco. The Bank of England raised interest rates to 4% this month, but they are expected to peak at 4.5% by June with the risk of stopping earlier at 4.25%. The latest CPI report shows that inflation is moving further away from the October 2022 41-year high of 11.1%, but it remains above the central bank’s target of 2%.
What to watch out for this week
- The Federal Reserve’s upcoming meeting minutes will be closely watched due to uncertainty about how high interest rates may rise in the central bank’s fight against inflation. Friday’s personal income and spending data will provide more insight into price pressures, and earnings from major retailers will indicate how consumers are coping with rising prices.
- In the Eurozone, the highlight of the economic calendar will be the release of flash PMI data for February on Tuesday, which will reveal how well the economy is performing following an unexpected growth in the final quarter of 2022. On Wednesday, Germany’s Ifo Business Climate Index will indicate how the region’s largest economy is handling the energy crisis, with economists anticipating continued signs of recovery at low levels.
- The Bank of Japan is undergoing a leadership transition, with academic Kazuo Ueda expected to succeed current Governor Haruhiko Kuroda when his second five-year term ends in April. On Friday, Ueda and his two potential deputies will testify to the lower house of parliament.
Day:
Impact:
Restrictions:
Description
Instrument
Dates
GMT +2
Forecast
Previous
Add event to calendar
Error: Your Requested widget "FTMO Start Challenge " is not in the widget list.
- [do_widget_area av_blog]
- [do_widget_area av_everywhere]
- [do_widget id="categories-6"]
- [do_widget id="categories-4"]
- [do_widget id="categories-7"]
- [do_widget id="newsbox-3"]
- [do_widget id="recent-posts-4"]
- [do_widget_area av_footer_1]
- [do_widget id="text-8"]
- [do_widget id="text-13"]
- [do_widget id="text-14"]
- [do_widget id="text-12"]
- [do_widget id="text-16"]
- [do_widget id="text-18"]
- [do_widget id="text-20"]
- [do_widget id="text-23"]
- [do_widget_area av_footer_2]
- [do_widget id="nav_menu-19"]
- [do_widget id="nav_menu-26"]
- [do_widget id="nav_menu-20"]
- [do_widget id="nav_menu-21"]
- [do_widget id="nav_menu-22"]
- [do_widget id="nav_menu-23"]
- [do_widget id="nav_menu-24"]
- [do_widget id="nav_menu-25"]
- [do_widget_area av_footer_3]
- [do_widget id="nav_menu-4"]
- [do_widget id="nav_menu-27"]
- [do_widget id="nav_menu-10"]
- [do_widget id="nav_menu-11"]
- [do_widget id="nav_menu-9"]
- [do_widget id="nav_menu-13"]
- [do_widget id="nav_menu-15"]
- [do_widget id="nav_menu-17"]
- [do_widget_area av_footer_4]
- [do_widget id="nav_menu-5"]
- [do_widget id="nav_menu-28"]
- [do_widget id="nav_menu-8"]
- [do_widget id="nav_menu-7"]
- [do_widget id="nav_menu-6"]
- [do_widget id="nav_menu-14"]
- [do_widget id="nav_menu-16"]
- [do_widget id="nav_menu-18"]
- [do_widget_area av_pages]
- [do_widget_area eckb_articles_sidebar]
- [do_widget_area eckb_articles_sidebar_2]
- [do_widget_area eckb_articles_sidebar_3]
- [do_widget_area footer-ftmo-left]
- [do_widget id="text-10"]
- [do_widget id="text-11"]
- [do_widget id="text-9"]
- [do_widget id="text-15"]
- [do_widget id="text-17"]
- [do_widget id="text-19"]
- [do_widget id="text-21"]
- [do_widget id="text-24"]
- [do_widget_area footer-ftmo-right]
- [do_widget_area post-loop-footer-author]
- [do_widget id="text-2"]
- [do_widget id="text-4"]
- [do_widget id="text-3"]
- [do_widget id="text-5"]
- [do_widget id="text-6"]
- [do_widget id="text-7"]
- [do_widget id="text-22"]
- [do_widget id="text-25"]
- [do_widget_area tet]
- [do_widget id="nav_menu-2"]
- [do_widget_area widgets_for_shortcodes]
- [do_widget_area wp_inactive_widgets]
- [do_widget id="custom_html-18"]
- [do_widget id="recent-comments-2"]
Disclaimer
All information provided on this site is intended solely for the study purposes related to trading on financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of FTMO and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity and it is advised not to risk more than one can afford to lose!
