WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Major stock indices closed with mixed results as investors assessed inflation data alongside indications of a more patient approach from Federal Reserve officials. Large-cap value stocks saw favourable performance, driven by Citigroup, Wells Fargo, and JPMorgan Chase which reported strong earnings, primarily due to higher interest rates. In the European market, the pan-European STOXX Europe 600 Index, measured in local currency, concluded the week 0.95% higher, breaking a three-week decline, buoyed by dovish statements from Fed policymakers and reports of potential economic stimulus measures in China. However, individual national indices showed diverse outcomes, with Germany’s DAX falling by 0.28% and the UK’s FTSE 100 Index gaining 1.41%.
US30 +0.79% |
US100 +0.15% |
US500 +0.45% |
GER40 -0.28% |
Brent crude surged to over $90 per barrel on Friday, up nearly 8% for the week, driven by the ongoing conflict in southern Israel and Gaza that has heightened geopolitical tensions in the Middle East. Iran’s foreign minister issued a strong warning, suggesting that Tehran-backed militants could join the Israeli-Hamas conflict if the Gaza blockade persists. In addition, the US imposed initial sanctions on tanker owners transporting Russian oil priced above the G7 cap of $60 per barrel, aiming to enforce punitive measures against Russia due to the Ukraine invasion. Gold prices surpassed $1,920 per ounce on Friday, recovering from earlier losses and gaining support from heightened Middle East tensions following Israel’s evacuation call for Gaza City residents. The precious metal also benefited from optimism regarding potential pauses in the ECB and Fed interest rate hikes, with US regulators advocating a cautious approach in the recent FOMC minutes. Lingering concerns over China’s fragile economic recovery emerged as the country’s September CPI index approached deflationary levels. Over the week, gold was set to achieve an impressive 4.3% gain.
NATGAS -3.80% |
The Dollar Index hovered around 106.5 on Friday, maintaining its position after rising 0.8% in the previous session. This gain was driven by US consumer inflation data surpassing expectations, strengthening the belief that the Federal Reserve will maintain elevated interest rates. The US annual inflation rate remained at 3.7%, slightly above the market consensus of 3.6%, while the monthly rate posted a smaller-than-expected decline to 0.4%. In addition, the release of the Fed’s meeting minutes on Wednesday indicated that the central bank is committed to maintaining elevated borrowing costs for an extended period to bring inflation back to the 2% target. However, the Fed acknowledged that there are uncertainties surrounding the economy, oil prices, and financial markets, emphasising the need for a cautious approach in determining further policy adjustments.
EUR/USD -0.17% |
USD/JPY +0.18% |
GBP/USD -0.80% |
USD/CAD -0.06% |
Bitcoin (BTC) is currently trading in an ascending channel around $27,056, with resistance at $28,000 and support near $26,750. Lower volumes and volatility indicate a growing bias conflict among traders, which coincides with a decrease in Bitcoin network activity due to lower new investments and liquidity. Market sentiment is divided between hopes for a US Bitcoin ETF approval and concerns about the Federal Reserve’s interest rate strategy, as supply accumulation among large investors continues.
BTC -3.11% |
ETH -4.41% |
LTCUSD -5.31% |
XMRUSD -1.20% |
In the UK, the economy rebounded in August, with GDP expanding by 0.2%, following a contraction of 0.6% in July, mainly driven by growth in professional services and education. However, the data also revealed declines in construction and production.
In the EU, the minutes from the European Central Bank’s September meeting showed that a “solid majority” of policymakers voted to raise the key deposit rate to a record 4.0% despite “considerable uncertainty.” The decision was aimed at not weakening the ECB’s determination, especially with inflation above 5%.
In the US, sentiment improved as Fed officials expressed caution about interest rate hikes, acknowledging the need to balance tightening against overly restrictive policies. Minutes from the Fed’s September meeting confirmed the shift in thinking toward maintaining restrictive rates and focusing on the duration rather than the size of rate hikes. The slightly higher-than-expected inflation readings didn’t have a significant impact on investor expectations, likely due to the additional uncertainty caused by the conflict between Hamas and Israel. Core producer prices rose 2.7% year-on-year, while core consumer price index (CPI) inflation was in line with expectations, rising 4.1% year-on-year.
In addition, particular attention is being paid to industrial production, with an expected growth of 0.1%, a decline from the 0.4% growth reported in the previous period. The housing sector will also be under scrutiny, with a focus on data on building permits, housing starts, and existing home sales. Other data to follow include business inventories, overall capital flows, the NAHB Housing Market Index, the NY Empire State Manufacturing Index, and the Philadelphia Fed Manufacturing Index. Beyond the U.S., Canada is set to release inflation data, retail trade figures, housing starts, and housing prices. Brazil is publishing retail trade figures.
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