Weekly round up
UK markets traded lower this week as the pandemic and inflation woes retook the front stage.
The Bank of England surprised markets by raising rates for the first time since the pandemic began in a signal that the it is prepared to meet the challenge of inflation with higher interest rates.
The FTSE 100 Index traded lower by around 0.45% to 7,270 points at the time of writing. On the economic data front, UK retail sales rose 1.4% month-on-month in November, beating market expectations of a 0.8% gain and were 7.2% above pre-pandemic February 2020 levels. The main upward contribution came from sales at non-food stores including clothing, computers, toys and jewellery stores. Retailers noted strong trading related to Black Friday sales in the lead up to Christmas.
In the commodity markets, gold climbed above $1,800 an ounce on Friday as the dollar weakened amid a rush of global central bank policy adjustments.
The US dollar retreated from recent highs as other major central banks caught up with the Federal Reserve’s tightening schedule. Both the European Central Bank and Bank of Japan are scaling back pandemic-era asset buying.
Brent crude futures weakened below $75 per barrel on Friday as traders reassessed the demand outlook amid rising Covid cases globally. UK natural gas prices fell to 320 pence a therm on Friday after hitting an all-time high of 359.48 pence in the prior session.
US stock futures edged lower on Friday after tech names sold off in the previous session. Investors rotated out of growth stocks into cyclical and defensive names. The tech-heavy Nasdaq Composite Index plunged 2.47% on Thursday, erasing the post-fed rally as investors grappled with an impending global tightening cycle. The Federal Reserve has already signalled three interest rate hikes in 2022.
Among the most notable decliners were Apple (-3.93%), Tesla (-5.03%), Nvidia (-6.8%), Microsoft (-2.91%) and Amazon (-2.56%).
The yield on the 10-year US Treasury note fell to below 1.42% on Friday, moving toward its lowest level since December 5th as investors sought safety amid the spread of Omicron. US President Joe Biden warned of a winter of severe illness and death for the unvaccinated while Australia’s and UK Covid-19 cases hit pandemic highs as Omicron continued to spread globally.
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