Weekly round up
UK markets managed to regain momentum this week, with the FTSE 100 Index gaining 0.67% to trade at 7,562 points at the time of writing.
Investors were more upbeat on Friday after strong earnings from US listed Amazon helped to ease some concerns regarding the health of the technology sector.
Investors digested a more hawkish policy stance from both the Bank of England and the European Central Bank this week. The Bank of England raised interest rates by 25 bps as expected, including four votes for a steeper 50 bps hike, and will be tapering its £875 billion quantitative easing programme by ceasing the reinvestment of proceeds from gilts and hiving off its stock of corporate bonds by next year.
The yield on the UK 10-year government bond soared to 1.37%, the highest since December on the back of the rate rise. The Bank of England governor deemed the rate hike necessary to control inflation which soared to 30-year highs in December. Money markets now expect the Central Bank to raise interest rates by a total of 1.5% this year.
In the commodity markets, Brent crude futures extended gains above $91 per barrel on Friday, hitting fresh seven-year highs and bringing year to date gains to more than 17%.
Oil prices are also headed for their 7th straight weekly gain, as demand recovery, falling stockpiles and supply disruptions combined to push crude prices higher, with Goldman Sachs projecting oil to hit $100 per barrel this year.
OPEC+ agreed to increase oil output by 400,000 barrels per day in March, as widely expected, but analysts are increasingly doubtful that all its members will be able to meet their production targets.
Gold prices stabilised above $1,800 an ounce on Friday after dipping 1% in the previous day, as a weaker dollar helped counteract pressure from a jump in US Treasury yields.
US equity futures rose on Friday as investors welcomed record earnings from several technology stocks, after the Nasdaq posted its worst day in more than a year on Thursday, falling by 3.74%.
Amazon shares surged 13% in Friday’s pre-market trading session following a strong quarterly report, helped by its investment in Rivian and growth in its main business.
Snap also soared 50% pre-market after reporting its first ever quarterly net profit, along with Pinterest which jumped 16% on an earnings beat. The moves came after Meta Platforms, formerly Facebook, plunged over 26% on Thursday following a disappointing earnings report.
Meanwhile, investors await the highly anticipated nonfarm payroll due on Friday, with market consensus seeing an increase of 150k in January. This would be the lowest reading since December 2020, as the Omicron variant left many Americans out of work due to illness.
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