Global Markets News Round-up: 23/02/23

The Federal Reserve has released the minutes of its January meeting, which revealed that officials expect further interest rate hikes will be necessary to reduce inflation to the targeted 2%. However, almost all the officials backed a slowdown in the pace of hikes. Following the release of the minutes, investors raised rate peak expectations to 5.36%. 

Office landlord Columbia Property Trust, owned by Pacific Investment Management Co., has defaulted on $1.7bn of mortgage notes on seven buildings in the US due to falling property values and increasing interest rates. 

Meanwhile, in China, schools have halted classes to stem the spread of Covid and other illnesses, which are resurging after pandemic restrictions were eased. 

As inflation appears to be set to continue, investors are searching for hedges against inflation that do well in higher rate environments. While gold tends to trade in opposition to rising real rates, hard assets like real estate are also risky. One solution may be to filter for the sorts of companies that can raise prices without losing customers. Sectors associated with splurge spending, such as carmakers and travel companies, have outperformed this year, possibly due to the underlying strength of the global consumer and the lifting of travel restrictions in China.

Meanwhile, G-7 nations plan to help Ukraine access IMF financing by the end of March and are set to create a new tool to coordinate the enforcement of sanctions on Russia. 

In the UK, there is a three-year plan to double the number of female fund managers. Helena Morrissey launched her Pathway Programme last month and will train 60 women each year to manage both their lives and investors’ money, as well as provide opportunities for networking with senior fund managers. 

Keir Starmer, UK opposition leader, will promise a long-term plan to improve Britain’s public services and economy in a keynote speech in Manchester. 

Wells Fargo has reportedly cut over 500 jobs from its mortgage unit this week. 

Key highlights:

  1. UK surpasses India to become world’s 6th largest stock market while still standing behind France which is Europe’s largest stock market at the moment. The combined market cap of the companies on UK markets was around $3.1 trillion which was $5.1bn higher than India. While weaker pound and value opportunity is drawing investors to the UK, weaker rupee and fall-out due to Adani Group is dragging India down
  2. Axa to go for a $1.2bn buyback as profit estimates meet
  3. GIC backed Metro Pacific Hospital to revive its $1bn IPO plan
  4. Adnoc Gas’ $2bn IPO covered in hours

Markets yesterday:

Global stocks experienced mixed results on Thursday, with Asian stocks fluctuating while European equity futures rose and US contracts continued to advance. 

Contracts for the S&P 500 rose by 0.4% while Nasdaq 100 contracts rallied by 0.8% following a bullish outlook from chipmaker Nvidia Corp. 

In Australia, stocks fell while South Korean shares rose. There was no trading in Tokyo due to a Japanese holiday. 

The dollar also weakened against all Group-of-10 currency counterparts, with the Australian dollar performing particularly well thanks to stronger-than-expected business investment data. 

The US Treasury benchmark fell by four basis points on Wednesday after the release of minutes from the Federal Reserve which indicated that officials expect further interest rate increases to curb inflation. In addition, “a few” officials expressed openness to a 50 basis-point hike in the central bank’s meeting earlier this month. This led to investors increasing their expectations for the Fed’s interest rate cycle peak to 5.4% in July, up from 4.9% in June a month ago. 

Oil edged higher after the longest run of losses this year, as traders assessed the impact of US monetary policy and China’s reopening on demand. 

Global indices at 6:30am UKT:

Dow Jones: 33,045.09 (-0.26%)

NASDAQ: 11,507.07 (+0.13%)

FTSE100: 7,930.63 (-0.59%)

CAC40: 7,299.26 (-0.13%)

Sensex: 59,844.67 (+0.17%)

Nifty50: 17,585.40 (+0.18%)

Nikkei225: 27,104.32 (-1.34%)

Disclaimer: The information provided in this summary is based on sources believed to be reliable and accurate. However, the accuracy and completeness of the information cannot be guaranteed. The opinions and views expressed in this summary are for informational purposes only and do not constitute investment advice. This summary should not be relied upon as the sole source of information when making investment decisions. Any decisions made based on information contained in this summary are the sole responsibility of the reader and may not be in the reader's best interest. The author and publisher assume no liability for any errors or omissions in this summary.
MSc Finance graduate from the London School of Economics and Political Science (LSE)
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Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis

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