The consumer price index (CPI) report was hotter than expected, rising 0.6% in August, its biggest monthly gain of the year, with core CPI also increasing above estimates. However, retail sales climbed at a higher rate than expected, indicating that consumers are willing to spend despite increasing prices. This week, the Federal Reserve will hold its policy meeting where they are expected to hold rates steady, with 97% of traders betting on a pause, according to the CME FedWatch Tool. Investors will be looking out for clues from policymakers on their outlook in the fight against inflation.
The S&P 500 and the Nasdaq recorded their second consecutive week of losses, declining 0.2% and 0.4%, respectively. The Dow Jones bucked the trend to eke out a small gain of 0.1%. The market debut of British semiconductor company Arm on the Nasdaq rekindled investor hopes in the IPO market, which has been lackluster for the past two years. Shares of Arm surged 24.7% on its first trading day to notch a valuation of $69bn before falling 4.5% on Friday. Oil prices continued their recent surge, with Brent crude rallying 12% in the past three weeks, logging its biggest gain in that period since April. West Texas Intermediate oil prices climbed above $90 per barrel for the first time since November, after averaging at around $75 for most of this year but remains below last year’s peak of $123.
The European Central Bank (ECB) raised rates for the tenth consecutive time, taking the key deposit rate to a record high of 4%. However, the ECB hinted that it was nearing the end of its hiking cycle, lifting European markets which had their best day in six months on Thursday following the signal that the hike was likely to be the last. The pan-European STOXX 600 closed the week at a five-week high, logging a gain of 1.6% for the week. Germany’s DAX rose 0.9%, France’s CAC 40 advanced 1.9%, while the FTSE 100 in London climbed 3.1% for the week.
Markets in Asia mostly ended the week higher after a batch of positive Chinese economic data boosted investor sentiment. Better-than-expected growth in August’s retail sales and industrial production, which rose 4.6% and 4.5%, respectively, topped forecasts of a 3% and 3.9% increase, with both sets of data also faster than July’s figures. Despite this, ongoing weakness in the troubled property sector led to the CSI 300 shedding 0.8% for the week while Hong Kong’s Hang Seng retreated 0.1%. Japan’s Topix ended at a 33-year high on Friday, notching its highest close since June 1990, and rose 3% for the week. The Nikkei closed at its highest level since 3 July and advanced 2.8% for the week, with the index close to setting a new 33-year high. South Korea’s KOSPI rose 2.1% for the week, its biggest weekly rise since mid-July.
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