Market Summary Week Ending 06/08/2023

In a move expected by markets, the Bank of England raised interest rates by a further 0.25% last Thursday (3 August), increasing the overall rate to 5.25%. This was despite a sharp drop in the CPI reported for June, dropping down from 8.7% to 7.9% for the 12 months to June.

However, the Bank of England identified that a strong demand for workers, which is pushing wages higher, coupled with a slow decline in food inflation and a rise in the cost of services that has only just reached a peak, are proving a persistent barrier to bringing down inflation. Interest rates will continue to remain high for at least the next two years as part of these continued efforts.

As a result, across the trading week, both the FTSE 100 and 250 indices were down 1.61% and 1.03% respectively.

 In the US, the final week of earnings season saw strong reports for companies in a number of major sectors, including Amazon, who jumped 8.3% after beating its expectations on profits made. Booking.com also gained 7.90% on significantly better than expected results following the recent boom in demand for travel and services.

Overall, in what has been a stronger earnings season than many analysts expected given recent continued interest rate rises and the challenges brought through inflation, 84% of the S&P 500 companies have released their results, with 80% of these surpassing Wall Street expectations.

However, despite the positives seen in some sectors, over the trading week, all three of the major indices finished the week with losses as the Nasdaq and S&P 500 dropped about 2.9% and 2.3%, respectively, to notch their worst weeks since March. The Dow Jones edged down 1.1%.

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.