In our previous update, we discussed the return of upwards momentum in US inflation and mulled over the possible impact on future Federal Reserve (Fed) rate cuts. Last week it was the UK’s turn with the latest CPI print jumping by 60 basis points (bps) to 2.3%, which was +0.1% ahead of estimates[1]. The blame was laid at door of higher household energy bills with the energy regulator Ofgem raising its price cap once again last month. With the Bank of England set to host its final policy meeting of the year in three weeks’ time, the likelihood of a second straight rate cut has been thrown into question. Despite that, the FTSE100 advanced by +2.5% for its best weekly gain in six months with sterling weakness providing a springboard for overseas earners. The more domestic centric FTSE250 posted a more modest +2.5% gain.

US equities made broad based gains, helping to recover some of the prior week’s losses with the S&P500 rising +1.7% in dollar terms. Much of the focus was on NVIDIA’s Q3 earnings release on Wednesday which demonstrated another period of considerable growth for the world’s largest company, albeit future guidance was lighter than some analysts had expected[1]. Back in Europe, investors moved back into bad news is good news territory with the MSCI Europe ex UK index adding +0.6% (euros) despite a disappointing Purchasing Manager Index (PMI) print. The hope is that a deterioration in the economic backdrop could prompt an acceleration in rate cutting activity by the European Central Bank (ECB). Moving to Asia, Chinese equities lost further ground with the Shanghai Composite slumping by -1.9% (renminbi) on little news although investors remain concerned about the possible impact of the income Trump regime. Calls for additional government stimulus are also getting louder with September’s slew of new measures not deemed effective enough by many economists and market participants. As for Japan, the Nikkei 225 declined by -0.9%.

Concluding with commodities, oil prices gained as the war in Ukraine intensified once again. Brent Crude jumped by +3.8% to $75.00 a barrel after the UK and US governments permitted the use of their missiles within Russian territory, which in turn was met  by Russia testing a hypersonic missile in Ukraine. Gold surged by +5.2% to $2,706 an ounce, the largest weekly gain in more than eighteen months with those growing geopolitical tensions leading investors to seek safe haven assets.

Week Ahead

Source: Workspace DataStream, 25/11/24

[1] T. Rowe Price – Global Markets Weekly Update 22/11/24

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