Market Summary Week Ending 28/05/2023

Negotiations continued throughout the week between Republicans and Democrats in the US to strike a deal to raise the US debt ceiling, with the aim of avoiding a potentially catastrophic default on the US Government’s debt obligations.

Furthermore, core figures for the US showed that inflation remains stubbornly high, with an overall increase in the Personal Consumption Expenditures Price Index of 0.4% for the year to April 2023, above analysts’ expectations of 0.3%.

This is likely to have a large impact on the Federal Reserve’s decision on interest rates at the next meeting in June (13th/14th) with minutes released Wednesday showing that policymakers are cautious about raising interest rates further, balancing both the need to bring inflation down to its long-term 2% target and the spillover effect from the recent troubles seen within the banking sector.

Despite news of higher-than-expected inflation, positive sentiment around a deal being brokered meant that markets rallied towards the end of the week, resulting in the Nasdaq notching its fifth straight weekly gain, with an increase of 2.5% across the trading week. The S&P 500 also posted a one-week advance of 0.3% with the Dow Jones being the odd one out, dropping 1% across the week.

On Monday (29th May), a debt ceiling deal was brokered between President Joe Biden and the House of Representatives Majority Leader Kevin McCarthy with congress set to vote on the legislation as early as Wednesday to ensure that the debt ceiling is raised before the 5th June, which the US treasury has stated that is the earliest date that the US could begin to default on its debt obligations.

In the UK, heading into the third and final bank holiday weekend of the month, the FTSE 100 showed tentative signs of recovery on Friday, after a turbulent week that saw numbers from the Office for National Statistics reveal far higher levels of inflation, with a likely future view of further interest rate hikes at the Bank of England’s next monetary policy committee in June (22nd)

As a result, across the trading week, both FTSE indices fell to end a tumultuous week with the FTSE 100 down 1.7% and the FTSE 250 down further at 2.6% for the week.

 

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.