Market Report: Mixed performance on global markets, with Fed still unconvinced inflation is easing

Written by Derren Nathan, Head of Equity Research, Hargreaves Lansdown

US Stocks were up yesterday, but gave back some of their early gains after the publication minutes from the Federal Reserve’s latest meeting.

S&P 500 index was up 0.8% and the Nasdaq Composite gained 0.7% on the day, but both had been up over 1% earlier on. The minutes noted that the inflation data received for October and November showed welcome reductions in the monthly pace of price increases, but the committee stressed that it would take substantially more evidence of progress to be confident that inflation was on a sustained downward path.

Asian stocks have fared well over night with Chinese indices doing particularly well with the Shanghai composite up 1.8%. Hong Kong’s Hang Seng was up 0.9% as news emerged that the border with China is soon to open. The Hang Seng is now at its highest level since the end of October 2022. Meanwhile the FTSE 100 is expected to open broadly flat after a 0.4% uplift yesterday.

Clothing retailer Next reported some Christmas cheer, with better than expected festive sales. In the nine weeks to 30 December full price sales were up +4.8%, about £66m better than previous guidance of -2.0% for the period. Next has increased full year profit before tax guidance by £20m to £860m, up +4.5% versus last year. But it’s more cautious for the year ahead with inflation, Next’s own price increases, and the effects of higher mortgage payments expected to dampen customer demand. It’s guiding for a 1.5% decrease in full price sales for the year ending January 2024, with profit before tax to be £795m, down -7.6% versus the current year.

Brent Crude prices are up 0.75% today following sharp falls earlier in the week weighed down by worries about weak demand due to the state of the global economy and China’s rising Covid-19 cases. At $78.6 per barrel, prices are still well below those seen at the end of 2022, where they closed at close to $86.

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