Weekly round up
UK markets rebounded from a heavy sell-off last week with the FTSE 100 Index rising 3.66% since Monday, to trade at 7,173 points at the time of writing.
UK stocks traded higher after the release of upbeat economic data which revealed the UK economy surged at the strongest pace in seven months in January, surpassing levels prevailing before coronavirus struck. Gross domestic product rose 0.8%, recovering from an 0.2% fall in December when the Omicron variant was spreading.
The gain was much stronger than the 0.1% pace expectations by economists, underpinned by growth in all sectors. The increase left output 0.8% higher than in February 2020, with all parts of the economy expanding. Strong economic momentum amid soaring inflation strengthens the case for another interest rate hike by the Bank of England next week, although the war in Ukraine paints a gloomier picture for the months ahead.
Meanwhile, the US, its G7 allies and the EU will reportedly remove the ‘most favourable nation’ status from Russia, opening the door for new tariffs on its exports and increasing the isolation of the Russian economy.
In the commodity markets, Brent crude oil traded around $112 on Friday and is on track for its biggest weekly drop since November, as investors weighed escalating bans on Russian oil against efforts to bring more supply to the market from other major producers.
Having touched a 14-year high of $130.5 earlier this week in anticipation of Russian oil embargoes, crude prices reversed dramatically on indications that Europe would not join its allies in banning Russian oil and on potential supply additions from Iran, Venezuela and the UAE. Meanwhile, analysts warned that other members of OPEC+ will be unlikely to fill the supply gaps from the oil ban against Russia, which is the second largest crude exporter, supplying about three million barrels a day of crude to Europe’s OECD countries.
Gold held below $2,000 an ounce on Friday after retreating from a near record high earlier this week as investors weighed geopolitical uncertainties against a commodity-driven rise in inflation which prompted central banks to signal willingness to tighten monetary policy sooner.
Major US stock indices closed lower on Thursday after having booked significant gains in the prior session as investors swung back to a risk-off mood amid the war in Ukraine, rising inflation and prospects of higher interest rates. The annual inflation rate in the US accelerated to 7.9% in February of 2022, the highest since January of 1982, but matching market expectations.
Higher price figures came along with a disappointing US jobless claims report, which in turn, eased some concerns about aggressive monetary tightening. Recent talks between Russia and Ukraine’s foreign ministers in Turkey failed as Moscow’s representative defended its invasion and said it was going as planned.
Week to date, the Dow Jones Industrial Average is down 1.31% and headed for its fifth weekly drop, S&P 500 has fallen 1.6% and the Nasdaq lost 1.38%.
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