Market Summary Week Ending 05/02/2023

The Bank of England voted to further increase interest rates by 0.5% at their first meeting of the year on Thursday, pushing the total interest rate to 4.00%. Whilst this will increase pressure on individuals with outstanding debts or mortgages, the bank’s economic outlook struck a more optimistic note, stating that inflation is now ‘likely to have peaked’ and any recession is now predicted be less severe than originally thought.

Despite the increase in interest rates the FTSE 100 continued its strong performance for 2023 to close out the week 1.50% up with an overall increase of 6.10% since the beginning of the year.

In the US, stocks fell on Friday as investors digested a stronger than expected jobs report which showed that the US economy added 517,000 jobs in January – far more than analysts’ expectations of 187,000 – leading to some investor concern that the Federal Reserve will continue to increase interest rates.

However, investors took heart from recent signs of falling inflation and well as comments from Federal Reserve Chairman, Jerome Powell, saying that the “disinflationary’’ process has begun, with hope of potential interest rate decreases throughout the rest of 2023.

As a result of this optimism, the S&P 500 closed the week higher by 1.62%. The Nasdaq Composite gained 3.31%, posting its fifth-straight winning week as it rode a tech-fuelled rally to outperform the other major indexes. Meanwhile, the Dow Jones was the outlier, down 0.15% for the week.

Please note for this weekly summary, we focus on the major indices within the financial markets such as the FTSE 100 (UK) and the Dow Jones and NASDAQ (US) to provide a factual account of what has happened within a certain index. Performance figures quoted are factual from the previous week’s trading and this summary is for commentary purposes only.

The performance of these indices is not a representation of an individual fund or portfolio. Past performance is no guarantee of future returns. The value of your investment can go down as well as up. You could get back less than you originally invested.