Weekly round up
UK markets traded lower on Thursday and are set for a weekly loss, with the FTSE 100 Index falling by 0.5% to trade at 7,576 points at the time of writing. The annual inflation rate in the UK hit a three-decade high of 7% last month, driven by soaring food and energy prices, pressuring the Bank of England to tighten monetary policy quickly.
Markets expect the Bank of England to raise rates to 1% during the meeting on May 5th and see 140 basis points of hikes by year-end. Elsewhere, the Federal Reserve is expected to tighten monetary policy aggressively and deliver a 50 basis point rate hike this month, as the US inflation rate hit 8.5% in March, the highest since December of 1981.
Meanwhile, the ongoing war in Ukraine fuelled more caution this week after Vladimir Putin said peace talks were at a dead end. UK markets will be closed on both Friday and Monday in observance of the Good Friday and Easter Monday holidays.
In the commodity markets, Brent crude futures eased slightly toward $107 per barrel on Thursday, after sharp gains in the past two sessions, as traders weighed a larger than expected build in US oil stocks against tightening global supply.
Latest International Energy Agency data showed US crude inventories rose by more than 9 million barrels last week, well ahead of the 863,000 barrel build expected by analysts, driven in part by release from the nation’s strategic reserves.
Meanwhile the UK oil benchmark is still up more than 5% this week amid signs that Chinese demand may be returning and as the Russia-Ukraine war and related sanctions threatened more disruptions to global supply.
Gold held up above $1,970 an ounce on Thursday, hovering near its highest levels in a month, as investors looked to hedge against inflation and geopolitical uncertainties, while seeming to look past an impending interest rate hike by the Federal reserve.
US equity futures were little changed on Thursday, after a strong finish on Wall Street, as investors awaited quarterly earnings reports from big US banks such as Citigroup and Wells Fargo. In Wednesdays regular session, The Dow Jones Industrial Average advanced 1% after two losing days, while the S&P 500 and Nasdaq Composite jumped 1.1% and 2% respectively, each breaking a three day decline.
Investors digested a mixed start of the earnings season, with upbeat results from the world’s largest asset management firm, Blackrock Inc, Delta Air Lines Inc, and industrial supplies distributor Fastenal. JP Morgan was down 3.2% after posting a 42% decline in first-quarter profits and reporting a $524 million hit caused by Russian sanctions.
Elsewhere, investors remained on edge over the Ukraine war after US President Joe Biden announced an additional $800 million in military assistance to Ukraine on Wednesday, ahead of a wider Russian assault expected in Eastern Ukraine.
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