Market Summary Week Ending 06/11/2022

Across all global markets, the anticipation of interest rate hikes from the major central banks in both the UK and US was the focus of investors throughout the trading week. In the UK, the Bank of England announced a further hike in the base rate, with a 0.75% rise from 2.25% to 3.00%.

This was the biggest increase announced in over 30 years and represents a further bid by the Bank to tackle increasing inflation in line with its longer-term objective of 2%. This rate rise was announced with a clear rhetoric from Andrew Bailey, the Governor of the Bank of England, that the central Bank is not averse to increasing rates further to help achieve this longer-term goal.

Despite this, markets reacted positively towards the end of the week as traders digested the most recent interest rate rise as well as a subsequent weakening of the pound. The trading week closed with the FTSE 100 up 2.03%, or 146.21 points, at 7,335 with an overall weekly rise of 4.10%, the best since January 2021.

Meanwhile in the United States, the Federal Reserve also increased US interest rates by 0.75%, taking the top end of the Federal Funds target range to 4%, in a move widely expected across global markets.

However, equity markets faced pressure this week after the Federal Reserve Chairman, Jerome Powell made clear on Wednesday that the central bank is “nowhere near’’ ending a campaign to achieve their longer-term inflation target of 2% and like the UK would not be averse to further interest rate increases.

As a result, for the week, the Dow Jones slipped 1.4%, the S&P 500 fell 3.3% and the Nasdaq dropped 5.6%.

Looking forward, all eyes this week will be on the US Mid Term elections which are taking place on Tuesday (8 November) and the potential effects on the financial markets of either Republicans or Democrats taking potential control of Congress, and the impact of either party’s direction of future spending policies.

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.