Macroeconomic/ geopolitical developments
- The MASSIVE week for market data and events resulted in an extension of the 2023 “risk on” theme from January into February.
- Wednesday’s FOMC decision to hike rates 0.25% as expected was met with a perception of a slightly more dovish tone from Fed Chair Powell.
- In addition, both the Bank of England (BoE) and European Central Bank (ECB) hiked rates 0.50% on Thursday, but again markets perceived comments as more dovish than expected.
- Mega cap stocks in the US were overall disappointing in their results and guidance, despite a positive tone from Meta, as Apple, Amazon and Alphabet all disappointed.
- The US Employment report surprised significantly to the upside on Friday, with the NFP data massively beating expectations, posting at 517K, as the Unemployment rate fell to 3.4%, its lowest since 1969.
- The Institute for Supply Management (ISM) non-manufacturing PMI jumped to 55.2 from 49.2 in December, way above consensus, whilst S&P Global Services and Composite data from European economies also broadly beat estimates.
Global financial market developments
- The major US, European and Asian stock averages were all positive territory again for the week, moving to multi-month highs.
- Growth stocks were again the leaders with the Nasdaq posting a fifth successive week of gains.
- The UK benchmark index, the FTSE 100 hit a new record high, buoyed by a weaker Pound.
- US and European Bond yields were erratic, but broadly sideways.
- The US Dollar Index hit a new multi-month low but posted a strong rebound into the end of the week.
- Gold nudged higher to initially build on the 2023 surge, to then plunge from another new multi-month high.
- The January Oil rally has been reversed, with the market back close to multi-month lows.
- Copper sold off from near multi-month highs, for a more negative tone.
Key this week
- Central Bank Watch: Focus this week will be on Tuesday with the Reserve Bank of Australia (RBA) interest rate decision and the Fed’s Powell speaks at the Economic Club of Washington, D.C.
- Macroeconomic data: A light week for data, German CPI, UK GDP and US Michigan Consumer Sentiment are the standouts.
|Key Macroeconomic Events
|EU Retail Sales
|RBA interest rate decision; Fed’s Powell speaks
|Nothing of note
|China CPI, UK GDP, Manufacturing and Industrial Production; Canada Employment report; US Michigan Consumer Sentiment