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– For the week, U.S. Equity markets were under pressure with concerns around the Federal Reserve and additional rate hikes. The Dow Jones (DJIA) slipped 0.2%, marking its second weekly drop. The S&P 500 closed the week at 4,090.46, down 1.1%. The biggest loser was the Nasdaq which was down 2.4%.
– The U.S. jobs total surges by 517,000 jobs in January. U.S. unemployment rate hits its lowest level since 1969 at 3.4%, a huge positive for the U.S. economy.
– In addition to the above, U.S GDP actually managed to rise 2.9% in the fourth quarter despite rising fears of a recession. The January consumer price index (CPI) figures being released on Tuesday are expected to increase by 0.5%.
– U.S. Unemployment Rate – The U.S. added 517,000 jobs in January this took the unemployment rate to 3.4% this being its lowest level since 1969!
– The European yields closed down yesterday with the German and Italian 10 year yields closing the week at 2.366% and 4.211% respectively.
– European Central Bank officials have argued whether they will soon pause interest rate hikes given the concerns around core inflation. The core figure remains at a record high level at 5.2% through January. The next ECB meeting is scheduled for the 22nd February 2023 with a 50 bps hike to be expected.
– In the UK, Sterling (GBP) came under pressure from the very strong U.S. data that was released. GBP closed the week at 1.20561 and is looking for a some positive macroeconomic data to digest. The UK’s employment figures will be released on Tuesday 14th February 2023.
– GBP.USD – Sterling came under pressure last week due to the hot U.S. macro data. The market now looks to find support at the 200day moving average @ 1.19418.
– India’s central bank raised its key interest rate by 25 basis points last week and indicated the possibility of further rate increases with robust inflation. Unemployment rate fell to 7.14% in January which is its lowest level in four months.
– China continues to buy gold in large volumes. The Chinese Central bank bought 15mt of gold last month, 32mt in December and 30mt in November. Analysts expect China to continue its buying spree to help stabilise the yuan and perhaps challenge the U.S. dollar as the worlds reserve currency.
– China Gold Reserves – The Gold buying spree of China continues as is evident with their increasing gold reserves. (figures in Million ounces).
– Crypto’s were in the red last week with Bitcoin & Etheruem down 6% and 7.4% respectively. The main cause of this was that the crypto giant Kraken agreeed to close all crypto-staking operations in order to settle charges with the SEC (Securities & Exchange Commission). Bitcoin now looks likely to retreat back to it’s significant support level at $20k.
The week will be focused on the hot topic of inflation and interest rates especially with the CPI and PPI reports due out. The weakness in the U.S. Equity markets is fuelled by concerns of the Fed and corporate earnings coming in on the low side of estimates. Despite navigating a difficult macroeconomic landscape markets must also consider the geopolitic risks. The spy balloon tit for tat between China & the U.S. is one to watch closely.
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