A Positive Week on the Markets Driven by Falling Inflation in the USA

UK & Europe: Markets Moving on up

European markets had five positive consecutive days, following promising news of easing inflation in the US. 

The Euro Stoxx 50 index ended the week up by nearly 4%, taking it to one of the best weeks of 2023. 

The news of the UK economy shrinking slightly in May 2023, and a fall in house building starts, showed that there are still underlying structural issues in the economy. 

Finnish Nokia and Swedish Ericsson both reported disappointing profits, further exemplifying the tough times faced by vulnerable sectors in the European region, notably here with telecommunications. 

Whilst European markets were driven by gains in the chip, tech and luxury sectors the mining, real estate and telecommunications sectors weighed heavily and could prove future weak points. 

Americas: Easing Inflation

Data surrounding US inflation in June was released mid week, showing a dramatic fall from 4% in May to 3% in June. 

Markets were delighted by the news, which might suggest that the need for ongoing aggressive interest rate hikes can end. 

The S&P 500 and the Nasdaq indexes hit year long highs, with the tech sector leading the gains. 

Delta Airlines also announced bumped profits and the financial sector started their earnings session on Friday, with JP Morgan and Wells Fargo seeing particular gains. 

The USD fell to 15 month lows, which is usually indicative of future falling interest rates and positive market sentiment. 

Asia & Australasia: RBAs First Female Chancellor

Both South Korea and Australia decided to leave interest rates untouched. 

South Korea’s inflation rate remained around the 2.7% mark, much lower than some other economies' levels, which suggests that their need for interest rate changes might be lower. 

Amidst another week of geopolitical tensions, the UK and China engaged in a small spat, but the Chinese financial regulator also invited global powers to a meeting next week, to hopefully smooth things over. 

Finally, The Reserve Bank of Australia appointed their first female chancellor in their 63 year history, woop!

Stock World: Luxury In Demand

Watches of Switzerland reported revenues and profits to make most companies green eyed with envy. 

After announcing such bumper profits, their share price climbed by over 10%. 

Whilst a fall in crypto prices seems to have slightly dented their second hand Rolex trade, as the big winners in crypto turn to flashy assets like the Rolex, the remaining ongoing demand has bolstered any downturn. 

Luxury group Burberry also announced earnings last week. Whilst they were a little lower than anticipated, due to a slowing in Chinese demand, they still demonstrated a remarkable resilience in the luxury market, as the seemingly super wealthy are relatively unaffected by the cost of living crisis. 

Other luxury stocks, notably Hermes and LVMH, saw their share prices rise on the back of the positive news in the sector.