Market Review from Realm Investment Management – week ending 7th April 2023
Stocks had a mixed week but generally held up well, consolidating the gains made in the previous week. Energy stocks out-performed once again as oil prices moved back above $80 /barrel after OPEC+ announced a cut in oil production. Not surprisingly this helped the FTSE 100 out-perform other stock indices.
At the start of last week Sterling reached it’s highest level versus the US Dollar since June ’22, hitting 1.2525. This largely on the expectation that the Bank of England has not finished raising interest rates. Huw Pill, Chief Economist at the BoE said he was not sure rates had been raised enough in the fight against inflation. Dollar weakness has also been a factor in the strength of GBPUSD; the Dollar Index (representing the USD against a basket of major currencies) is currently printing close to its February low (when it reached its lowest level since April last year).
The yield on the US 10-year Treasury rallied sharply on Friday following the latest US jobs report. Data showed the US economy added 236k jobs in March, not a number the Fed wants to see and odds are now higher that the US Central Bank will raise rates again by 0.25% in May. On the other side of that coin though was evidence from the latest PMI surveys that growth in the US economy is slowing. ISM Services PMI fell to 51.2 in March and ISM Manufacturing PMI decreased to 46.3 indicating that the interest rate hikes that have already taken place are having an effect. US inflation data is due this Wednesday.
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