Week 45 in brief
Stocks on Wall Street ended higher on Friday with the S&P 500 closing out its best week since June as a report on Thursday showing slowing inflation raised hopes that the Federal Reserve would soon slow its tightening campaign.
Cryptocurrencies investors underwent a rough week as the digital assets tumbled after FTX filed for bankruptcy protection, and CEO Sam Bankman-Fried resigned. The Nasdaq recorded the largest daily gain on Friday, thanks to gains in tech stocks.
How did the major indices perform? On Friday:
- The S&P 500 added 0.9%, to close at 3,992.93.
- The Nasdaq Composite added about 1.9% to end at 11,323.33
- The Dow Jones Industrial Average gained 0.1%, closing at 33,747.86.
For the week:
- The S&P 500 gained 5.9%
- The Dow was up 4.1%
- the Nasdaq Composite advanced 8.1%.
What drove the U.S. market?
- Citi group shares gained more than 10% over the past two trading sessions after signs of cooling inflation led to a drop in the U.S. dollar. The bank’s stock rose 3.7% on Friday, following a 6.8% gain in the previous session, which was triggered by Thursday’s better-than-expected CPI report. The dollar was headed for its biggest two-day drop since 2009.
- Investors see an 81% chance of a 50-basis point rate hike in December and a 19% chance of a 75-basis point hike.
- Adding some nervousness on Wall Street, crypto exchange FTX said it would start U.S. bankruptcy proceedings and that CEO Sam Bankman-Fried resigned due to a liquidity crisis that prompted intervention from regulators around the world.
How did the European markets perform?
- Stocks in Europe recorded their best weekly performance in nearly eight months on Friday, largely driven by bets of smaller rate hikes by the Federal Reserve and easing COVID-19 curbs in China.
- The Pan-European STOXX 600 index ended the Friday session up 0.1% at an 11-week high, with financial services, mining, and retail stocks leading the gains.
- The index marked weekly gains of 3.7%, mostly after data on Thursday showed U.S. consumer prices cooled more than expected in October, leading to expectations that the Federal Reserve could temper its size of future interest rate hikes.
- Further, news of China easing some of its strict COVID-19 rules kept investor sentiment buoyant, boosting shares of miners and luxury goods retailers.
- China-exposed luxury giants Hermes International Kering, and LVMH jumped between 2.4% and 2.8%. Richemont too soared 10.5% on better-than-expected sales and margins.
- The European basic resources jumped 2.6% as prices of base metals shot up.
- Shares of London-listed insurance giant Prudential were up 9.4% by mid-afternoon to lead the Stoxx 600.
- At the bottom of the index, Swiss-headquartered market expansion company DKSH fell more than 7% after Stifel cut its price target for the stock.
How did Asian markets perform?
- Stocks in Asia also recorded massive gains on Friday
- The Asia Dow, which includes blue-chip companies in the region, jumped 5.69% to 3,164.36 points on Friday. On a weekly basis, it soared by 8.98%.
- Tokyo’s Nikkei 225 stock exchange surged 2.98% to 28,263.57. The index was up 3.91% this week.
- The Hang Seng, the benchmark for blue-chip stocks trading on the Hong Kong stock exchange, enjoyed the largest rise with 7.74% to 17,325.66 points, while it had a weekly gain of 7.21% on Friday.
- Hong Kong’s economy narrowed by 4.5% year-on-year in the third quarter of 2022, following a 1.3% contraction in the previous three-month period.
- China’s Shanghai stock exchange soared 1.69% from the previous close to 3,087.29 points on Friday, while it was up 54% on a weekly basis.
- The Indian Sensex benchmark increased 1.95% to a fresh record close of 61,795.04 and the Singapore benchmark index gained 1.74% to 3,228.33 points.
- While Singapore added 3.14% this week, Sensex rose 1.39%.
Bonds and Commodities
- The yield on benchmark U.S. 10-year paper slipped below 4% on Thursday. U.S. bond markets are closed on Friday for Veterans Day.
- Oil prices rose after the U.S. inflation data but were on track for weekly declines of more than 4% due to COVID-related worries in China.
- U.S. crude futures settled up $2.49 at $88.96 a barrel, while Brent rose $2.32 to settle at $95.99.
- U.S. gold futures settled up 0.9% at $1,769.40 an ounce.
- Sterling edged higher against a weakening dollar on Friday after British economic data came in stronger than expected. The pound scored its biggest daily gain since March 2020 against the dollar on Thursday after U.S. consumer prices cooled off in October
- Sterling rose 0.2% to $1.1730, after hitting its highest since Aug. 26 at $1.1766.
- The yen jumped as much as 1.6% to 138.78 per dollar Friday, rallying for a second day to the strongest level since late August.
- The turmoil in cryptocurrency markets this week sent bitcoin to two-year lows. After the FTX announcement, bitcoin fell 4.17% to $16,819.00.
- FTX’s native token FTT plunged 28.47% at $2.666, having fallen 90% month-to-date.
Next week, big-box retailers including Walmart, Target, Macy’s, Home Depot, and Lowe’s will report earnings, in what could be the last big week of this corporate earnings season as it winds down. On Wednesday, the U.S. Census Bureau will release retail sales data for the month of October, providing a key update on consumer spending heading into the holiday shopping season.
Fresh housing market data will also be released, with October housing starts, building permits, and existing home sales due, as well as the NAHB’s Housing Market Index.
We can expect updates from the U.S. manufacturing sector with industrial production data for October and the Philadelphia Fed Manufacturing Index for November.