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Market Insights

Market Insights - Week 5

Rowan Rozemond

Rebounding from the prior week’s decline, last week U.S. equities closed the on a positive note. The Nasdaq surged more than 4% for its fourth week of Jan’23 whereas Dow and S&P 500 posted smaller gains in comparison.

The market appreciated value stocks which outperformed growth shares. Consumer discretionary stocks remained stronger whereas the typically defensive consumer staples, health care and utilities segments lagged.

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

  • The Dow Jones Industrial Average (DJIA) and S&P Midcap 400 Index closed with modest gains. While the former added 602.59 points over the week to close at 33,978.08, the latter added 97.95 points to end the week at 4,070.56.
  • The NASDAQ composite surged more than 4% over the week, added 481.27 points to close at 11,621.71 with YTD gain of 11.04%.
  • The PCE (personal consumption expenditure), Fed’s preferred inflation gauge, rose 4.4% over the year ended in December. It is still above the Fed’s long-term inflation target of 2% but way below its 5.4% peak of February last year.
  • The pan-European STOXX Europe 600 Index gained 0.67% whereas Germany’s DAX index and France’s CAC 40 index added 0.77% and 1.45% respectively.
  • Italy’s FTSE MIB index ended 2.56% higher whereas The UK’s FTSE 100 posted a modest loss for the last week.
  • As per S&P Global, the composite Purchasing Managers’ Index (PMI) of Eurozone rose to 50.2 from 49.3 in Dec’22. It is imperative to note that PMI readings of more than 50 indicate expansion and that’s an assuring indicator for the European market.
  • Japanese stock market rose over the week where the Nikkei 225 index advanced 3.12% and the broader TOPIX index rose 2.90%.
  • The 10-year Japanese Govt. bond’s (JGB) yield finished the week around 0.47% level, up from the prior week’s 0.40%.
  • The Japanese currency yen weakened slightly to about JPY 129.91 against the US dollar, from about JPY 129.56 the previous week.
  • In China, financial markets were closed for the Lunar New Year holidays, the market will reopen on Monday, January 30, 2023.
  • The Hong Kong stock exchange resumed trading on Thursday, and the benchmark Hang Seng Index gained 2.96% for the holiday-shortened week.

The U.S. Federal Reserve Board Chair Mr. Jerome Powell is expected to hold a press conference after concluding the two-day policy meeting on Wednesday this week. Market is expecting another hike in the benchmark interest rate by a quarter of percentage rather than a half point (0.5%).

It is worth mentioning here that in 2022, the Fed approved seven rate increases, including a 50-bps hike in December, down from its previous 75 basis points increases.

We will come back with more updates soon.

Rowan Rozemond

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