Weekly Round Up
UK markets rose this week with the FTSE 100 gaining 0.55% to hit a 21-month high at 7,314 points at the time of writing.
Investors responded positively to the Bank of England’s decision to leave both interest rates and the quantitative easing programme unchanged, defying expectations of a rate rise. The Bank of England was unwilling to immediately raise interest rates as it now expects GDP growth to be weaker in the third and fourth quarters of 2021 than it forecast in August, with growth actively regaining its pre-pandemic level only in the first three months of 2022.
The Pound extended losses to a four-week low of 1.34 against the dollar providing a further boost to the FTSE 100 which derives the majority of its earnings from overseas operations.
The Halifax house price index in the United Kingdom rose 8.1% in October 2021 versus the prior year, the most since June as the performance of the economy and surge in demand for labour continued to provide a benign backdrop to housing market activity.
In the commodity markets, brent crude futures bounced back above $81 per barrel on Friday, after falling to as low as $80.19 a barrel in the previous session, as OPEC+ stood firm with its decision not to raise output despite international pressure.
The group of oil producers agreed on Thursday to stick to their plan of raising oil output by 400,000 barrels per day from December, despite threats from the Biden administration to use a full range of tools to bring oil prices down. Gold prices held firm above $1,790 an ounce on Friday, after a succession of central banks recently defied expectations of a hawkish pivot.
US stock futures were little changed on Friday. The S&P 500 and Nasdaq Composite indices closed at fresh record highs in Thursday’s trading session as investors await the monthly jobs report for insight on the state of the economic recovery.
Consensus estimates are pointing to 450,000 additional jobs for October, compared to 194,000 in September. The US unemployment rate likely fell last month to 4.7%, the lowest since March 2020, as the labour market gradually recovered, helped by a surge in demand for labour and record levels of job openings.
The US Federal reserve signalled it was in no hurry to raise interest rates, even as it began scaling back its monthly bond purchases, emphasising that current conditions do not warrant higher rates.
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