Weekly Market View from Realm Investment Management.
Week ending 6th May 2022.
Another volatile week and the fifth consecutive week lower for the US stock-market. Interest rates, inflation concerns and the war in Ukraine continue to weigh heavily on sentiment.
With markets anticipating further rate rises and high inflation, Bonds were also lower over the week and the US dollar rallied further. Crude oil and natural gas prices were also up.
UK investors holding overseas equities were provided some protection by the Pound which has been following sharply recently relative to other currencies.
The big event of the week was the FOMC meeting. At the conclusion on Wednesday, short-term interest rates were raised 0.50% and it was announced that in June the Fed would start reducing the balance sheet. Markets rose in late trading on Wednesday after Fed Chairman Powell restated that rate hikes of 0.75% would not be happening in the near future – “not something we are actively considering”. Investors will be watching key economic data closely going forward. If inflation is seen to be cooling off then maybe the Fed’s claim will be taken more seriously than it was on Thursday when the market gave up all of Wednesday’s gains (and then some).
All in all it was a bad week for stock markets especially the US Nasdaq Composite and the small-cap Russell 2000 Index which both ended the week down well over 20% from their November highs, i.e. in bear market territory.
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