Written by Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s Deputy CIO – Multi Asset, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
Stocks built on their good start to the year, following several central bank meetings around the globe, which highlighted that we are closer to the end of the rate-rising cycle. The FTSE was up 1.76% during the week. The S&P was up 1.64%. The Euro Stoxx 50 posted a return of 1.91%. Similar to last week, higher-risk company bonds continued to lead bond markets.
We saw a 23% jump on Thursday in Facebook’s parent company, Meta Platforms – the stock’s biggest daily gain in almost a decade – providing a major boost to the technology-heavy Nasdaq Index. Some of the enthusiasm drained on Friday, following disappointing results and outlooks from Apple, Google, and Amazon. Earnings are expected to decline about 5% relative to a year ago.
An American F-22 fighter jet shot down what the US insists was a Chinese spy balloon. The US is now recovering the debris to glean more information. Anthony Blinken, US Secretary of State, has cancelled a trip to China, saying China had violated US sovereign airspace. He had planned to meet President Xi Jinping on what would have been the first trip to China by a Biden administration cabinet secretary.
The Eurozone annual inflation rate fell to 8.5% year-on-year in January 2023 (vs. 9.0% expected), down from 9.2% the previous month, and marking the lowest reading in eight months. The decrease is mainly due to an easing in energy and services inflation. Separately, signs of wage inflation continued to ease in the US.
The Bank of England increased interest rates by 0.5%, lifting the base rate to a 15-year high of 4%, and hinted that interest rates may have peaked. The European Central Bank raised interest rates by 0.5% yesterday, bringing the deposit rate to 2.5%. The US Federal Reserve raised interest rates by 0.25%, marking the smallest hike in 11 months and bringing interest rates to 4.75%.
Oil fell 3% for the week, to finish at $77 per barrel, amid lingering uncertainties about China’s demand recovery and robust Russian crude exports. Earlier last week, an OPEC+ committee recommended keeping crude production steady, citing uncertainty about the impact of China’s economic reopening and the latest sanctions on Russian supply.
NZAOA, an $11 trillion investor group, says carbon removals no longer count towards net zero goals. Founded in 2019, the NZAOA is a UN-convened, member-led initiative of institutional investors committed to transitioning their investment portfolios to net-zero GHG emissions by 2050. The organisation has grown to 84 members with over $11 trillion in assets under management. The move is looking to encourage investee companies to prioritise emissions reductions instead.
The UK will post its preliminary estimate of fourth-quarter GDP growth. Market projections indicate stagnation in Britain’s economy, as high energy prices and rising interest rates weighed on spending. The US will be busy with earnings. CVS Health, Uber, Walt Disney, AbbVie, PayPal, PepsiCo, and Philip Morris International are the leading US companies to publish earnings reports. China will publish inflation data, which will provide a glimpse of the impact of the Covid reopening.
Sources: Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s Deputy CIO – Multi Asset, Marlborough’s Multi-Asset Investment team, T.Rowe Price, John Hancock, Morningstar, PIMCO, Trading Economics, and ESG Today.
Risk Warning: These are Nathan’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
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