Bullish sentiment prevailed on world markets this week. The stronger-than-expected GDP numbers from the U.S., the world’s largest economy, did not imply an imminent and immediate recession. Investors focused on expectations that global central bank aggressive tightening may cool off and China’s reopening. The markets also continued to digest a host of earnings data while exuding some caution ahead of monetary policy decisions from the Fed in the U.S., the Bank of England and the European Central Bank that are slated for next week.
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AMERICAS
The U.S. stock markets were higher with all three of the major indices posting a positive week. The gains came despite another arguably disappointing week of earnings reports. The tech-heavy Nasdaq soared by 4.3% the S&P 500 surged by 2.5% and the Dow Jones advanced 1.8%. The week’s gains came following better-than-expected GDP data. The U.S. economy saw a 2.9% expansion in the fourth quarter, beating consensus estimates of around 2.6%. For full-year 2022, GDP rose 2.1%, easing concerns about the prospects of a protracted recession. Furthermore, the U.S. Federal Reserve’s preferred gauge for tracking inflation, the US core personal consumption expenditures price index, slowed to an over one-year low of 4.4% in December. The latest data generated some optimism the Fed could engineer a soft landing for the economy despite the aggressive monetary tightening path pursued by the central bank. Nevertheless, a slowdown looks likely in 2023 as the property market is falling. Consumption is also running out of steam.
ASIA/PACIFIC
Asian stocks finished out the week with gains in continued light volume as financial markets in mainland China were closed for the Lunar New Year holiday, which started January 21, and will reopen on January 30. Japanese markets rose over the week, with stocks as measured by the Nikkei 225 Index returning 3.12%. Investors digested Tokyo’s January core consumer prices that rose 4.3% year on year in January, nearing the highest for Japan’s capital since mid-1981 and exceeding the Bank of Japan’s (BoJ’s) 2% inflation target for the eighth straight month. In other economic releases, Japan’s leading index, which measures future economic activity, decreased more than initially estimated in November to the lowest level in nearly two years but Japan’s private sector activity returned to growth in January. In Australia, the ASX 200 rose for the week. Final demand producer prices in Australia were up 0.7% on quarter in the fourth quarter of 2022 while export prices were down 0.9% on quarter and 20.5% on year.
EUROPE
European markets rose as research group Ifo said Germany, Europe’s largest economy, would likely avoid a recession this year. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 0.67% higher. In other economic news, business activity in the eurozone unexpectedly stabilized in January after contracting for six months and French consumer data for January showed current household confidence and unemployment worries stayed stable. In the UK, business activity fell to its lowest level in two years in January, as service sector output dropped, according to PMI surveys conducted by S&P Global. On the monetary policy front, European Central Bank President Christine Lagarde, Knot, and fellow Governing Council member Ollie Rehn repeated their recent calls for “significant” rate increases in February and March.
MIDDLE EAST/AFRICA
Trading On the Tel Aviv Stock Exchange (TASE) in the fourth week of January 2023 (22-26/01/2023)was conducted against the background of the reform emerging in the legal system in the economy and the concern of its effect on the Israeli economy, and continued dismissals in the high-tech industry. The benchmark TA-35 index decreased this week by 2.6%. This is according to the information contained in the weekly stock market report, released by the TASE.
In Nigeria, equities closed bullish during the week as the All-Share Index appreciated by 0.12%. Africa is set to outperform the rest of the world in economic growth over the next two years, with real gross domestic product (GDP) averaging around 4% in 2023 and 2024, the African Development Bank Group said in Africa’s Macroeconomic Performance and Outlook report for the region.
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This page has been prepared for informational purposes only. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
For any comments, suggestions or corrections email: kbalkoudi@worldmarketsdaily.com
Kyriaki Balkoudi is a markets editor for World Markets Daily. She holds a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.
References:
“Global Markets Weekly Update”. T. Rowe Price. January 27, 2023
“Weekly market wrap”. January 27, 2023
“Weekly Market Recap”. John Hancock Investments. January 27, 2023
“Schwab Market Update”. Charles Schwab. January 27, 2023
“Market Analysis” Edmond de Rothschild. January 27, 2023
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