Weekly round up
UK markets managed to shrug off most of the global volatility this week ending in positive territory with the FTSE 100 Index rising by 0.88% to 7,557 points at the time of writing.
Investors welcomed data showing Britain’s economy grew by a much stronger than expected 0.9% in November, rising above its pre-coronavirus pandemic level for the first time.
Services output advanced 0.7%, boosted by an 0.8% growth in consumer-facing services on the back of a sharp increase in retail trade.
Monthly construction output increased by 3.5% in November, the largest monthly rise seen in construction output growth since March 2021, exceeding market estimates of a 0.5% rise. The strong demand for work, in combination with supply chain bottlenecks for certain products easing and the unseasonal mild and dry weather were the main reasons for the increase.
Exports of goods and services from the United Kingdom rose 4.6% from a month earlier to a 22-month high of £57.1 billion in November, driven by a 15.2% increase in goods exports to non-EU countries.
Chinese stocks fell during the week amid recurring concerns over China’s Covid situation. The country has locked down a third city this week, raising the number of people confined to their homes to approximately 20 million. The WHO warned that omicron cases are “off the charts” with a record 15 million new Covid infections reported across the globe in a single week. China’s strict zero-Covid approach has turned investors cautious over its economy, with Goldman Sachs slashing its 2022 forecast for Chinese economic growth to 4.3% from 4.8% previously.
US stocks traded lower on Thursday as tech stocks weighed down the three main indexes. The S&P 500 dropped 1.4% and the tech-heavy Nasdaq Composite plunged 2.5%, while the Dow Jones erased as much as 175 points after adding around 200 points earlier in the session. The high-growth technology, consumer cyclical and communication services sectors led the declines as investors rotated into value and pro-cyclical stocks.
Investors continued to digest fresh inflation figures, which reinforced how the Federal Reserve will not need to raise rates at a faster pace than earlier announced. Initial jobless claims rose in the first week of the year when the Omicron spread started to disrupt activity but remained within a level consistent with a healthy job market.
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