Markets Are Up for the Week but Economic Data Causes Fears for the Future

Inflation, interest rates and recessions were all on the cards for last week’s markets

Zoe Burt
June 19, 2023
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A Brief Overview

UK & Europe: Mixed Economic Messages 

Americas: Promising Pause

Asia & Australasia: Recession & Repo Rates

Stock World: Food Glorious Food

UK & Europe: Mixed Economic Messages 

The UK announced promising economic growth of 0.2% for the first quarter of 2023, which caused many economists to upgrade their forecasts for the UK’s growth potential for the year. 

UK unemployment data also showed that it was at almost all time lows. This is pretty unusual for a climate of such slow economic growth, high inflation and raising interest rates. 

Meanwhile, the European Central Bank (ECB) announced a 0.25% hike to interest rates, taking them to their highest levels in 22 years. 

This was countered by the good news that showed EU inflation was down to 6.1% in May, after reaching 7% in April. 

Most major European markets ended the week in the green, with the Euro STOXX 50 up by nearly 2.5%, the FTSE 100 up just over 1% for the week, and the CAC 40, DAX 40 and FTSE MIB all similarly positive. 

David Dibert / Unsplash

Americas: Promising Pause

The Federal Reserve in the USA took the decision to pause interest rates, following 10 consecutive hikes. 

The decision to pause came on the back of promising inflation data, but they did caution the pause with the announcement that they will likely need to lift interest rates potentially twice more before the end of the year. 

The S&P 500, the Nasdaq and the Dow Jones all hit month long highs. Despite the news of further hikes, markets generally respond well to news of interest rate pauses. 

Gio Bartlett / Unsplash

Asia & Australasia: Recession & Repo Rates

New Zealand joined Germany and the Eurozone after reaching recession territory, after the economy shrunk by 0.1% in the first quarter of 2023. 

Meanwhile, China made a surprise cut to their short-term interest rates, specifically to their seven day repo rates. 

The cut was by 0.1% and is designed to stimulate the economy, which has been slowing down significantly in recent months.

Chinese markets soared in response to the change, but many are still fearing the slowing economic growth in China. 

Alejandro Luendro / Unsplash

Stock World: Food Glorious Food

Cava Group, a Mediterranean restaurant chain in the USA, had their IPO on the New York Stock Exchange last week. 

In the IPO, 14.4 million shares were sold at the value of $22 per share. 

It was a bumper first day for them on the stock market as the share price rose by over 99%, closing at $43.78 by the end of the day. 

This day one success is a huge boost not just for those eyeing up IPOs, but also for other restaurant chains listed on the stock exchange. 

The proof was in the pudding, as Dominos Pizza was one of the best performing stocks on the S&P 500 for the last two days of the week. 

Most consumer goods companies were also feeling the promise of such a successful IPO of a restaurant chain, with Coca Cola and McDonalds amongst those in the green.

Tamas Pap / Unsplash

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