The financials sector was one of the best performers, as big banks delivered their earnings reports. JP Morgan, Citigroup and Goldman Sachs saw stock gains after posting solid fourth quarter profits. Another sector also seeing strong gains was energy, with Brent crude rising 2.8% for the week due to US sanctions on Russia causing supply tightness. US Treasury yields were lower for the week, pressured by the inflation data, with the 10-year yield ending down at 4.61%.
European markets also found support in the US inflation data, as well as from declining bond yields, a welcome relief after having surged earlier in the month. For the week the pan-European STOXX 600 rose 2.4%, its fourth consecutive weekly rise, with regional indices also gaining. The UK FTSE 100 added 3.1% and closed at an all-time high. The latest UK CPI figure unexpectedly slowed to 2.5% in December, boosting the case for the Bank of England to cut interest rates again next month.
The mood was also lifted by better-than-expected GDP from China, with the economy growing 5.4% in the fourth quarter. For the year, GDP rose 5%, matching Beijing’s growth target. For the week the Shanghai Composite rose 2.3% and the Hang Seng index added 2.7%. Bucking the wider upbeat trend, Japanese equities declined, with the Nikkei 225 losing 1.9%. The yen strengthened against the US dollar, weighing on exporters. The moves came as there were growing expectations that the Bank of Japan will raise interest rates at its policy meeting this week following hawkish comments from governor Ueda.