Market Summary Week Ending 18/12/2022

The focus for markets this week was the announcement of CPI inflation data in the US and UK as well as the subsequent meetings for both the Bank of England and the US Federal Reserve.

In the UK, data released on Wednesday showed the UK inflation rate at 10.7% in November, down from 11.1% in the year to October. This drop in inflation figures was a major factor in the decision of the Bank of England to limit their latest interest rate rise to 0.5% (3.00% up to 3.50%) after a recent run of 0.75% increases.

Despite these positive signals, investors are still nervous about the potential for recession as we move into 2023. If inflation stays at higher levels than anticipated, central banks can be expected to continue raising interest rates in response. The result of this cautious sentiment was the FTSE 100 ending 1.1% lower across the trading week.

In the US, figures from the US Labour Department showed inflation was 7.1% over the twelve months to the end of November, dropping from 7.7% in October. As in the UK, this led to an interest rate increase of 0.5% from the Federal Reserve, which pushed the target range for the benchmark rate to 4.25% – 4.50%, the highest rate seen within the US for 15 years.

Investor concern about rate rises and recessionary fears were highlighted in the performance for the week across US markets, with declines seen on all three of the major indices. The Dow Jones and Nasdaq ended down 1.7% and 2.7% respectively and the S&P 500 down 2.08%.

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.