Powell says progress made against inflation – but US jobs data is much stronger than expected

Powell says progress made against inflation – but US jobs data is much stronger than expected

Market Review from Realm Investment Management – week ending 3rd February 2023

Stock-markets rallied mid-week after the US Fed lifted interest rates by 0.25% which suggested a slower pace of rate hikes was ahead. At the press conference following the announcement, Chairman Jerome Powell said there had been progress in the battle against inflation but noted that average hourly earnings gains were still “fairly elevated”.

US Stocks slipped back at the end of the week on disappointing earnings reported by Amazon, Apple and Alphabet and a much-stronger-than-expected US jobs report. Nonfarm payrolls increased by 517,000 in January, tempering speculation that the central bank might end its tightening campaign any time soon.

The US Dollar Index was very strong, recovering from a nine-month low the previous week. This didn’t help commodities and oil, natural gas, gold, silver and copper all finished the week lower.

On Thursday, the Bank of England raised interest rates by 0.5% to 4% and suggested that inflation had likely peaked. Over the week, GBPUSD fell, settling on Friday at its lowest level since 6th January, helping the FTSE 100 index to a new closing high.

UK Market Chart 3rd February 2023

US Market Chart 3rd February 2023

US Risk Barometer 3rd February 2023

Europe Risk Barometer 3rd February 2023

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

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