Wall Street wobbled amid hotter-than-expected US inflation data, with both Dow and S&P 500 finishing lower, while the Nasdaq notched higher for the week. Notably, both UK and EU markets outperformed, with the FTSE 100 hitting a record high amid cooled inflation data and strong energy stocks’ performance.
The APAC region, however, underperformed, due to uncertainties about China’s economic recovery. And both Australian and New Zealand markets finished the week lower after earnings season, with a mixed bag of company results.
This week, the FOMC meeting minutes will be a key focus for investors, to find clues about Federal Reserve’s rate-hike path. And another major central bank, the RBNZ, will hold its first policy meeting in 2023, providing guidance to the local economy.
What are we watching?
- US bond yields rise: Bond yields rose for the third straight week, suggesting that the Fed is most likely to keep hiking rates for longer and pushing the US dollar higher.
- Energy prices decline: Both oil and gas prices fell as US crude inventory rise for an eighth straight week, suggesting demand stays weak, while China’s reopening optimism faded. Natural gas prices fell to the lowest since November 2020 also due to lacklustre demand, while rampant inflation and central banks’ guidance for more rate hikes sparked economic concerns.
- Cryptocurrencies jump: Both bitcoin and ethereum rose to their highest level since August 2022 due to a short squeeze. The crypto exchanges, including Coinbase and Microstrategy, also jumped 17% and 20% respectively for the week, along with the digital markets’ advances.
Economic calendar (20-24 February)
All times are in AU AEST.