Weekly round up
UK markets were positive this week with the FTSE 100 Index rising by 0.62% to trade at 7,544 points at the time of writing. The index closed the 1st quarter 2022 1.8% higher, outperforming its European peers largely thanks to its heavier presence of commodity and energy-related stocks, which have been benefiting from soaring oil and metal global prices amid the war in Ukraine.
Economic data showed the British economy grew 6.6% year-on-year in the final quarter of 2021, slightly more than initial estimates of a 6.5% rise and following a downwardly revised 6.9% rise in Q3, despite the spread of the omicron coronavirus variant.
Public expenditure recorded the biggest increase of 10.5%, followed by household spending, 8.1% and business investment. Exports were up 1.2% and imports shrank 4%. At the end of 2021, the economy was just 0.1% below its pre-pandemic peak.
More than 20 million households are facing a 54% increase in energy bills from Friday and benefits will fall in real terms as economic data shows surging inflation hit consumer spending even before the effects of Russia’s invasion of Ukraine were felt. Energy bills for the 22 million households whose payments are capped will rise by an average of £693 to £1,971 a year from April 1st to reflect surging gas and oil prices.
In the commodity markets, Brent crude futures held below $105 per barrel on Friday ahead of a meeting among International Energy Agency member countries to discuss a further release of emergency oil reserves that would follow their March 1st agreement to release around 60 million barrels. Brent futures also held onto a 6% decline on Thursday after US president Joe Biden announced a release of 1 million barrels per day for six months starting in May, the largest release ever from the US Strategic Petroleum Reserve.
The aim for major consuming nations is to make up for disrupted oil supplies from Russia hit by sanctions for its invasion of Ukraine, and to calm surging energy prices. Meanwhile OPEC + stuck to plans to add a modest 432,000 barrels a day of supply in May despite western pressure on Saudi Arabia and the UAE to use their spare capacity to boost output further.
Gold held around $1,935 an ounce on Friday and is headed for a 1% weekly loss, as traders looked forward to the March US jobs report for clues on the pace of Federal Reserve policy tightening.
US equity futures edged higher on Friday after Wall Street closed out the first negative quarter in two years as investors looked ahead to a key monthly jobs report to guide the outlook for monetary policy.
Stocks saw an accelerated selling into the close on Thursday, with the Dow falling 1.56%, the S&P losing 1.57% and the Nasdaq Composite declining 1.54%.
All three major averages posted their worst quarter since March 2020, marked by surging inflation and rising interest rates, exacerbated by the war in Ukraine. The Dow and the S&P 500 dropped 4.6% and 4.9% respectively during the period, while the Nasdaq slumped 9%. Investors also remained cautious after Treasury yields inverted this week for the first time in years, signalling a possible recession.
Meanwhile, a strong jobs report on Friday could bolster the Fed’s aggressive tightening plans to control inflation without slowing the economy.
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