Weekly round up
UK markets continued to rise this week and are now trading above their pre Russia-Ukraine invasion levels with the FTSE 100 index rising 0.83% since Monday to trade at 7,464 points at the time of writing.
Retail sales in the UK unexpectedly fell 0.3% month-on-month in February of 2022, reversing from a 1.9% rise in January and below market forecasts of a 0.6% increase. There were large falls in alcohol and tobacco stores, potentially linked to higher spending in pubs and restaurants as confidence in going out increased.
At the same time, sales increased in non-food stores by 0.6%, namely in clothing, which increased by 13.2% and department stores, which increased by 1.3%, due to wider socialising and the return to the office.
Meanwhile, inflation worries continue after a PMI survey showed Britain’s firms reported a record rise in input prices; and the prices they charged also rose at a record pace. Sentiment has fallen to its lowest level in almost two years as firms braced for weaker economic growth and grew more worried about the economic outlook.
The Office for Budget Responsibility said after tax, disposable incomes in the 2022-23 financial year will see ‘the largest fall in a single year since records began in 1956-57’.
In the commodity markets, Brent crude futures held their decline to around $117 per barrel on Friday after falling 2.1% in the previous session, as the US and its allies are discussing a possible further coordinated release of oil from storage to help calm markets roiled by the Russia-Ukraine conflict.
However, Brent futures were still up around 10% this week amid multiple risks that threaten more supply shocks in the future, including: fears of further supply disruptions due to sanctions against Russia, a prolonged shutdown of the Caspian Pipeline Consortium terminal damaged by a major storm and a decline in US crude inventories.
Gold prices advanced to around $1,960 an ounce on Friday after jumping 1.9% in the previous two sessions, as investors looked to hedge against risks arising from the Ukraine crisis and a commodity-driven rise in inflation. Gold is up around 2% so far this week, recouping some of last weeks losses. Boris Johnson also suggested there was evidence that Russia was trying to get around sanctions using gold reserves.
US stock futures were broadly flat on Friday morning as investors appeared to shrug off uncertainties over the Russia-Ukraine war and the direction of US monetary policy.
In regular trading on Thursday, the Dow rose 1%, the S&P 500 gained 1.4% and the Nasdaq Composite jumped 1.9%, with all three erasing losses from Wednesday.
Technology, communication services and basic materials stocks led the advance, with strong gains from Apple, up 2.3%, Nvidia, up 9.8%, Alphabet, up 2% and Meta Platforms, up 2.9%.
The rebound in stocks from recent lows came despite no concrete signs of progress in the Ukraine conflict and the fact that the Federal Reserve indicated readiness to tighten more aggressively to fight surging inflation, making analysts sceptical of the rally.
Market moves were exacerbated this week by surprisingly hawkish comments from Federal Reserve Chair Powell, which, in turn, led markets to bet on a higher probability of the Fed lifting rates by 50 rather than 25 basis points in May.
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