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0711 2022

Market Insights

Market Insights - Week 45

Anupam Kumar

In about eight months, the US Fed funds rate reached from near Zero to 4% after another hike of 75 basis point announced on 2nd Nov’22 in FOMC’s November meeting. Markets expectation of a slower pace or a pause in the hike were dashed and stock markets fell over the last week.

Let us highlight some of the significant movements of the last week:

  • The tech-heavy Nasdaq Composite index was hit hard, fell nearly 6% and closed at 10,475.25 after it lost 627.20 points over the week which made it lose -33.04% YTD (year to date).
  • S&P 500 and DJIA also went down by -130.51 and -458.58 points to close at 3,770.55 and 32,403.22 respectively.
  • Year to date percentage change in Dow Jones Industrial average (DJIA) became -10.83% and the S&P 500 index stood at -20.89% over the last week.
  • The yield of the 10-year U.S. Treasury reversed its course from previous week’s decline and climbed to 4.16% at the end of the week.
  • As per the latest Government report in the United States, jobs growth exceeded expectations and generated 261,000 new jobs in October against the forecast for around 200,000 and this news which came towards the end of the week provided fuel for the handsome jump in the market on Friday 4th of Nov’22.
  • In Europe, the annual inflation rate climbed to 10.7%, up from 9.9% in the previous month September’22.
  • With the signals from the Central banks in Europe related to the curb in the pace of Key rate increases, shares in Europe rose for the third consecutive week.
  • The Germany’s DAX ended the week 1.63% higher, the pan-European STOXX Europe 600 added 1.51%, France’s CAC 40 Index advanced 2.29%, Italy’s FTSE MIB gained 3.34% and the UK’s FTSE 100 index climbed 4.07% over the last week.
  • Last week for the Japanese Equity market were also positive and the Nikkei 225 Index gained 0.35% whereas, the broader TOPIX Index advanced 0.86%.
  • Up from 0.23% for the week ending on 28th Oct’22, the yield on the 10-yr. Japanese Govt bond climbed to 0.25% over the last week closed on 4th of Nov’22.
  • Amid the news of relaxation in China’s Zero-tolerance Covid approach, the broad, capitalization-weighted Shanghai Composite Index gained 5.3% and the blue-chip CSI 300 Index advanced 6.4% as per the reports.

While the US Fed Chairman, Mr. Powell gave some indications towards the slowdown in the pace of rate hikes however, it looks at a very premature stage at least for this year and the market still expects for a peak fed funds rate of around 5-5.3% before the first half of 2023.

This week is also expected to remain in action with data coming from Consumer Credits on Monday, Wholesale Inventories on Wednesday and Consumer price index from US Bureau of Labor statistics on Thursday.

We will come back with more updates soon.

Anupam Kumar

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