Weekly Round Up
UK markets advanced to two-month highs this week, with the FTSE 100 Index rising by 1.8% to 7,220 points at the time of writing. Oil and mining stocks were the highest contributors amid higher prices of copper and as oil hovers over multi year highs, while upbeat corporate updates supported investor sentiment.
Bank of England rate setter Silvana Tenreyro said the central bank should not hike interest rates to deal with a spike in inflation caused by soaring prices for energy and semi-conductors if it thinks these effects will be temporary.
However, the energy crisis in the UK continues to take its toll in the utilities sector with two more companies exiting the market, forcing roughly 250,000 consumers to switch suppliers. Since August twelve companies have collapsed due to soaring gas prices.
In the commodity markets, gold drifted slightly lower to approximately $1,790 per ounce on Friday but held a four-week high and is on track to finish at least 2% up for the week as recent pullbacks in the dollar and bond yields lifted the metal’s appeal.
Brent crude futures rose roughly 1% to $84.8 a barrel on Friday, on the back of growing signs of market tightness, as shortages of natural gas and coal in Europe and Asia boosted demand for oil.
The International Monetary Fund recently lowered its global growth outlook and urged central banks to act quickly should inflation accelerate, cautioning against 1970s stagflation concerns citing problems mainly lie on the supply side.
US stock futures were trading higher on Friday, after the S&P 500 Index posted its best day (on Thursday) since March, rising 1.71% as investors’ focus shifts back to the outlook for solid economic growth and strong earnings.
Earnings from Citigroup, Wells Fargo, Bank of America, Morgan Stanley and UnitedHealth beat market forecasts following JP Morgan and Blackrock. The yield on the benchmark US 10-year Treasury note slipped below 1.52%, benefiting big tech stocks such as Microsoft, Apple, Facebook and Alphabet.
Meanwhile, fresh economic data provided additional support with initial jobless claims falling to a new pandemic low and producer inflation rising less than expected.
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