Market Monitor – 17 February 2023
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Market Monitor – 17 February 2023

Stock markets around the world made solid progress this week despite fresh concerns around economic growth and the potential for further interest rate rises

A further decline in the rate of inflation in the United States initially appeared to be cause for celebration. But the data showed that prices for staples such as housing, food and energy had not slowed as quickly as expected. Buoyant retail spending in the US means the Federal Reserve could decide to prolong its programme of monetary policy tightening well into 2023. Meanwhile, strong fourth-quarter company earnings reports, in Europe in particular, continue to support market gains.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.5% down for the week so far, with the S&P 500 closing level with last week’s finish. Economic data again painted a mixed picture, with strong retail sales contrasting with a sharp downturn in the manufacturing sector. Uncertainty about the Fed’s next move on interest rates persists, although this week has seen another rise in Treasury rates which reflect the market’s medium- and long-term interest expectations.

UK

In the UK, the FTSE 100 closed on Thursday 1.7% up for the week so far, having finally breached the 8,000-point barrier. This week’s gains were given considerable support by a drop in the value of the pound as interest rate expectations in the US and UK diverged further. With the weak British economy giving the Bank of England less scope to raise rates than its counterpart in Washington DC, sterling has fallen back from recent highs – boosting the international earnings of UK blue-chips in the process. The inflation rate in Britain dipped by 0.6% in January, a larger decline than expected, and positive trading reports from the travel and commodities sectors also boosted sentiment.

Europe

In Frankfurt, the DAX index ended Thursday’s session up 1.5% for the week, while France’s CAC 40 gained 3.3%. Shares in Paris made particularly strong gains and approached an all-time high on prospects for luxury goods makers, which will benefit disproportionately from the reopening of the Chinese market. Solid trading statements from Germany’s industrials sector added to the week’s gains, although the European Central Bank repeated its warning that rate rises were set to continue.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 1% as diplomatic tensions between China and the US continued following the recent spy balloon controversy. At the same time, investors remain to be convinced that the Chinese economy will stage a strong and even recovery in 2023 following the lifting of the country’s pandemic-era restrictions. Japan’s Nikkei 225 index of leading shares advanced 0.1%, with weakness in the yen versus the US dollar supporting another positive week. Upbeat earnings reports from motor manufacturers and chipmakers were also welcomed, while a surge in foreign visitors to Japan drove retailers’ shares higher.

10 February
16 February
Change (%)
FTSE 100
7882.5
8012.5
1.7
FTSE All-Share
4312.9
4377.4
1.5
S&P 500
4090.5
4090.4
0.0
Dow Jones
33869.3
33696.9
-0.5
DAX
15308.0
15533.6
1.5
CAC 40
7129.7
7366.2
3.3
ACWI
646.9
648.1
0.2
Hong Kong Hang Seng
21190.4
20987.67
-1.0
Nikkei 225
27671.0
27696.4
0.1

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 16 February 2023.

17 February 2023
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Market Monitor – 17 February 2023

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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