- Markets were muted in the early part of the week and inflation concerns were the main focus as crude oil futures hit their highest level since 2014.
- Other negatives were a warning from Bank of England Governor Andrew Bailey that a “very damaging” period of inflation could occur unless policymakers take action and concerns over the debt crisis at Chinese property giant Evergrande also continued to weigh.
- On the positive side data released on Tuesday from the Office for National Statistics showed that the UK jobs market continues to recover with the unemployment rate falling to 4.5%, the lowest in a year.
- Other data mid-week showed that the UK economy grew by 2.9% in the three months to August end, slightly below expectations of 3%, but UK industrial production was up 0.8% in the month of August, well ahead of forecasts.
- Also helping sentiment was news that emergency relief measures to counter the energy crisis would be imminently approved in Europe. UK stocks had a strong end to the week similar to other global markets.
- Our Breadth Indicator stayed neutral but our Momentum Indicator ticked higher for the first time since June .
- Weaker-than-expected US jobs data released on the previous Friday tempered any bullish sentiment at the start of the week.
- US inflation data for September came in slightly higher than expected at 5.4% and the latest Fed minutes indicated the central bank could begin the tapering process as early as mid November.
- Markets had to weigh those negatives against a positive start to third-quarter earnings season and an unexpected easing of inflation in China with consumer price inflation slowing to a 6-month low of 0.7% for September.
- Investors chose to focus on strong reports from major US banks and stocks closed strong for the week.
- Our Breadth Indicator stayed negative and our Momentum Indicator ticked down again.
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