Market Summary Week Ending 25/06/2023

In the UK, two important economic data releases saw a major impact on the main indices across the trading week. Firstly, data released on Wednesday showed that inflation remained at 8.7% for May, against an expectation 8.4%, showing that prices remain stubbornly high, despite the measures taken from the Bank of England (BOE) through its continued increasing of interest rates, to try and quell rising demand.

This response was escalated further this week from the Central Bank following the unexpected stagnation in the inflation rate, with a further increase in the BOE base rate of 0.5%, from 4.5% up to 5% against the markets expectations, with many pricing in a 0.25% rise.

Bank of England Governor Andrew Bailey stated that whilst they are not looking to bring about a recession through increased hikes, the bank would take whatever decision was necessary to bring inflation down to the Banks longer term target of 2%. Mr Bailey also expects inflation to “come down markedly this year” but warned there were signs of it being “more persistent” across the year, adding the Monetary Policy Committee had made the “right” decision with “decisive action today.”

As a result, across the trading week, the FTSE 100 & 250 were both down 1.63% & 4.13% respectively as investors digested the unexpected rise in both inflation and interest rates.

In the US, continued fears of a recession led to a decrease in investor confidence and a poor trading week across all of the 3 major indices despite the Federal Reserve decision to ‘skip’ further interest rate increases in their previous meeting, held on 14 June.

As a result, across the trading week all three major averages broke multiweek winning streaks. The S&P 500 lost about 1.4%, ending five consecutive weeks of gains. The Nasdaq dropped 1.4%, snapping an eight-week win streak and posting its worst weekly performance since March. The Dow was nearly 1.7% lower, ending a three-week positive run.

 

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.