ATTIVO
Market Summary Week Ending 11/12/2022
The big news for UK investors this week was Chancellor Jeremy Hunt’s easing of banking regulations affecting the UK’s financial sector.
The announcement included a package of more than 30 regulatory reforms which the Chancellor claims will “turbocharge” growth within the City of London – a key financial hub seen as a major growth engine for the economy moving forward. Many of the regulations now being overturned were originally introduced following the 2008 financial crash to ensure adequate liquidity within major banks and lending institutions, as well as to curb the behavior of individuals seen within in the industry before the crash.
Critics say these changes risk forgetting the lessons of the financial crisis, however, Mr. Hunt responded that “We have learned the lessons of that crash, we put in place some very important guardrails which will remain, but the banks have become much healthier financially since 2008.”
For the day on Friday, after the announcement of these regulatory banking changes, the FTSE finished up 0.1%, however across the week it was down 1.05%.
There is high anticipation amongst investors for next week’s inflation and interest rate announcements from the Bank of England following their December meeting on Thursday (15th).
In the US, the markets came under pressure early in the week as negative investor sentiment followed elevated wages seen in the US November jobs report. This could push the Federal Reserve to raise interest rates to a higher level than expected next year to combat inflation, in line with their longer-term target of 2%.
These fears were raised further on Friday with the release of the Producer Price Index (a measure of what companies get for their products in the pipeline) which increased 0.3% for the month and 7.4% from a year ago, higher than market expectations.
This led to market drops across all three of the major indices on Friday (9th), with the Dow Jones Industrial Average dropping 0.9%, the S&P 500 down 0.73%, and the Nasdaq Composite falling 0.7%.
As a result of this, for the week, the Dow Jones fell 2.77%, its worst week since September, the S&P 500 tumbled 3.37%, while the Nasdaq also dropped 3.99% overall.
Both US and UK investors will be eagerly waiting for the Inflation CPI Data release which is scheduled for Tuesday (13th). The data from this will have a knock-on effect on the interest rate announcement from the Federal Reserve after their December meeting, due to take place next Tuesday/Wednesday (13th/14th).
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.