Equity markets rose this week, helped by US congress agreeing to increase the US debt ceiling temporarily allowing the US to avoid defaulting on its debt payments until early December. Inflationary pressures continue to be front and centre of investors’ minds.
Last week’s performance – major stock markets
| S&P 500 | +0.79% |
| Nikkei 225 | -2.51% |
| CSI 300 | +1.31% |
| Euro Stoxx 50 | +0.94% |
| FTSE 100 | +0.97% |
Commentary
US: Congress agrees to increase the US debt ceiling temporarily
Most of the major benchmarks recorded gains, with the S&P 500 Index recovering a portion of the previous week’s losses. Energy stocks led the gains as natural gas prices reached record highs in Europe. Senate Republicans agreed to take up a bill to raise the Treasury’s borrowing limit by USD 480 billion, which would allow the federal government to keep paying its bills until early December.
Japan: Stock indices fall on global concerns
Against the broader backdrop of worries about global inflation, oil prices, and the Chinese property market, Japan’s stock markets lost ground for the third week in a row, with the Nikkei 225 Index falling 2.51%. Investors were also concerned about the prospective policies of newly inaugurated Prime Minister Fumio Kishida, who indicated that he might support a capital gains tax increase.
China: Positive economic data boosts markets
Chinese markets rose Friday following the week-long Golden Week holiday as the CSI 300 Index advanced 1.31%. Investors looked past the government’s regulatory crackdown, property sector turmoil, and a nationwide power crunch and focused on positive economic data. Economic data on Friday showed that the economy appears to have bounced back and moved back into expansion territory.
Europe: Surge in natural gas prices brings inflation to the forefront
Shares in Europe ended higher despite significant volatility, with inflation concerns stemming from the surge in natural gas prices dominating investor sentiment. Natural gas prices surged to record levels amid global shortages, threatening to increase costs significantly for households and to curb industrial production. Prices declined slightly after Russian President Vladimir Putin hinted that Gazprom, Russia’s state-backed gas company, might increase supplies of the thermal fuel to Europe.
UK: Energy and financial stocks push markets higher, despite inflation worries
The FTSE 100 was up almost 1%, pushed higher by energy and financial stocks. Inflation concerns dominated during the week. The Bank of England’s Chief Economist raised concerns about high inflation potentially being more persistent than previously expected. The energy crisis continues to dominate in the UK too with prices continuing to rise during the week until Putin’s comments appeared to stabilise prices somewhat.