Weekly round up
UK markets rose again this week, continuing their rebound, with the FTSE 100 Index rising 2.14% since Monday to trade at 7,322 points at the time of writing.
The Bank of England rose rates by 25bps to 0.75%, consistent with the Federal Reserve’s move on Wednesday. Contrary to the Federal Reserve, the Bank of England struck a more dovish tone and pushed back against bets of a 2% interest rate by year-end as the UK economy faces challenges due to its higher dependency on energy imports.
Energy stocks traded higher after the International Energy Agency warned the world could potentially face the worst energy supply crisis in decades. Markets were weaker on Friday as hopes for a Russia-Ukraine cease-fire deal began to fade following Russian officials stating that news of progress in discussions was false. Meanwhile, the Pentagon warned that Russia could threaten to use nuclear weapons if the war drags on.
In the commodity markets, Brent crude futures rose above $107 per barrel on Friday, rallying from below $100 per barrel earlier in the week, after the news that peace talks between Russia and Ukraine did not yield significant progress, raising fears of further sanctions and prolonged disruption to the oil supply.
Oil is still on track to drop for a second straight week, having fallen significantly from a recent high of $139.13 per barrel reached on March 7th as traders continue to assess geopolitical and economic uncertainties.
Gold weakened to $1,940 an ounce on Friday, heading for its biggest weekly drop since late November as the prospect of further interest rate increases outweighed safe haven demand. Analysts argued that while a quarter point rate hike was widely expected, the aggressive plan for six more rate increases over the course of this year was more hawkish than anticipated. Elevated US Treasury yields and a relatively firm dollar also weighed on gold prices.
Major US stock indices closed higher for the third straight session on Thursday after recovering from initial losses. The Dow Jones Industrial Average added over 400 points to close at a one month high of 34,479, while the S&P 500 and the Nasdaq finished 1.2% and 1.3% higher respectively.
Energy and materials stocks led the gains, amid a 9% jump in crude oil prices, as the International Energy Agency issued warnings of Russian oil supply shortages in the next month. US stock futures were trading lower on early Friday after the US secretary of state poured cold water on hopes of a diplomatic settlement to the war in Ukraine, saying there were no signs Vladimir Putin was prepared to stop Russia’s invasion of its neighbour. Anthony Blinken played down expectations that the warring countries would be able to come to an agreement that would see Russia withdraw its forces from Ukraine as he vowed Washington would investigate “war crimes” carried out by the Russian military.
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