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Week ending 17th February 2023.

20th February 2023

After UK inflation data this week showed inflation cooled to 10.1% year on year in January, retail sales in the UK showed sales increased 0.5% month-over-month in January 2023, rebounding from an upwardly revised 1.2% drop in December with online shops boosted by sales promotions.

The FTSE 100 index made history this week after it surpassed the 8,000 points mark for the first time on Thursday 16 February. The FTSE 100 index was launched in January 1984 at the base level of 1000 and consists of shares from the 100 biggest UK companies by market capitalisation. As we have spoken about many times, the majority of the companies are internationally focussed and derive their revenue from abroad. Much of the index’s recent success can be attributed to its defensive qualities, namely its high exposure to oil and gas, while the financial sector has also benefited from rising interest rates.

US PPI also increased 0.7% month-over-month in January. The report reaffirmed US CPI data from earlier in the week illustrating that inflation isn’t cooling as quickly or as smoothly as some in the market had originally hoped.

US initial jobless claims unexpectedly dropped in the week ending the 11 February, suggesting the labour market is still tight due in part to reduced labour force participation. US retail sales also unexpectedly jumped 3% month-over-month in January, the biggest increase since March of 2021 and greater than market forecasts of a 1.8% rise. Data this week suggested that US consumer and labour market remains resilient indicating the economy remains in relatively good health. With the Fed remaining data dependent, this week’s economic indicators will be carefully considered when gauging their next policy move.

Next week is a quieter week data-wise. We are expecting UK & European consumer confidence, Japanese, UK, US & Eurozone PMI.  On Wednesday the Fed minutes from the last policy meeting on the 1 February will be released. In addition, we also have Japanese CPI and US PCE.

Investment Management Team

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