Weekly Market Overview – Equity markets bounce despite inflation scare

Despite a brief panic on Wednesday when US inflation figures came in higher than expected, stoking fears of accelerated interest rate rises, markets had a strong week across the board following 2 weeks of significant market weakness. US markets were up 4.4% in USD terms, however weakness in the currency meant the return in Sterling terms was just 2.5%. European equities gained 3.3%, UK equities 3.2%, Emerging Market equities 3.1% and Japanese equities returned 0.7%. On a sector basis IT stocks lead the way, followed by Materials, with Energy and Telecom stocks lagging slightly. The underperformance from Energy stocks was perhaps surprising given the 4.2% increase in Oil. Sterling gained 1.4% vs the US Dollar, 0.2% vs the Euro, but fell -1.0% vs the Yen. Government bond yields were largely unchanged, UK 10Y Gilt yields were up 1.1bps, as were US 10Y treasury yields which gained 2.4 bps, while German 10Y Bund yields were down -3.9 bps. In US Dollar terms Gold rallied 2.4% as Metals gained 5.9%.

Read our full Market Update Week 7