Market Summary Week Ending 23/10/2022

Continued turmoil within the UK government saw further volatility within the markets this week with the new Chancellor of the Exchequer, Jeremy Hunt announcing that there would be large scale reversals of the proposals set out within the Mini Budget last month to sure up the long-term future confidence of the Financial Markets.

Later in the week, as a result of the loss of confidence from within her own party, Liz Truss announced that she would be stepping down as Prime Minister.  Quoting that she could not ‘deliver the mandate on which she was elected’ and deliver the economic growth plans that had proven to be unsustainable by the markets, leading to large scale volatility and unrest, she resigned on Thursday

All eyes are on the candidates to replace Liz Truss as Prime minister, with both Penny Mordaunt and Rishi Sunak announcing their respective campaigns. Mr Sunak is, currently seen as the favorite to take the top role which would be seen by many as the financial markets’ choice, given his mandate of greater fiscal responsibility to provide the reassurance and confidence that has been tested over the previous weeks.

UK markets responded well to the news that Truss would be leaving her role with the FTSE 100 finishing Friday, 25.8 points higher or 0.4% at 6,969.73 with an overall gain across the week of 110.9 points, a percentage rise of 1.62%.

In currency markets, The pound climbed by 0.9% against the dollar in early trading Monday morning to trade 0.4% higher at £1:$1.1350 as a result of the news on Sunday evening of Boris Johnsons’ exit from the Conservative leadership race.  Investors bet that his leadership rivals were more likely to forge on with the economic policies that have calmed markets in recent days.

Over in the US, markets were buoyed by hopes that the Federal Reserve may not raise interest rates as high as initially thought. This followed a report in The Wall Street Journal which suggested that some Federal Reserve officials are worried about overtightening with large interest rate hikes.

This led to The Dow Jones Industrial Average gaining over 748.97 points, or 2.47%, to close at 31,082.56. The S&P 500 and Nasdaq Composite both also rose by 2.37% to 3,752.75 and 2.31% to 10,859.72, respectively.

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.