US equities were little changed last week despite higher-than-expected inflation data being released in the country. The headline Consumer Price Index (CPI) rose by 10 basis points (bps) to 3.2% against flat expectations whilst the underlying core index also edged higher[1]; the uptick was largely due to an increase in the dominant shelter component. Producer inflation also accelerated, the Producer Price Index (PPI) jumping by 70bps to 1.6% which was half of a percentage point above forecasts[2]. US treasury yields rallied as a result, the closely monitored 10-year security yield jumped by 23bps to 4.32% although equity moves were limited with the S&P 500 concluding the week just -0.1% lower in local currency terms.

Elsewhere in global equity markets, the MSCI Europe ex UK index rose by +0.3% whilst the FTSE 100 gained +0.9%. A modest bounce back in economic growth during January provided support for domestic equities with the UK recession likely to be short lived if that trend continued into February and March. Moving to Asia, Japanese equities lost some momentum with the Nikkei 225 retreating by -2.5% (local currency). That reflected growing expectations that the Bank of Japan will move away from its negative interest rate policy over the coming months. As for China, the Shanghai Composite added +0.3% on growing investor confidence despite the challenging economic backdrop.

In commodity markets, oil advanced strongly as supply concerns continued to mount. Attacks on Russian energy infrastructure coupled with persistent nervousness regarding the Middle East helped to lift Brent Crude by +4.0% to $85.44 a barrel. Copper prices also moved sharply higher, reaching a near 7-month high of $8,969 a tonne (weekly rise of +5.7%) on agreed output cuts by key producers in China. Concluding with gold, the precious metal retreated by -0.5% to $2,162 an ounce on a pull back in expectations of the first Federal Reserve interest rate cut.

Week Ahead

Source: Refinitiv Workspace, 18/03/24

[1] Bureau of Labor Statistics – Consumer Price Index Summary February 2024

[2] Bureau of Labor Statistics – Producer Price Index Summary February 2024

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