Market Update

This week, UK inflation data revealed a decrease to 10.1% on an annual basis in January. Concurrently, UK retail sales for January 2023 experienced a 0.5% monthly rise, recovering from a 1.2% slump in December, which underwent an upward revision. This uptick was partly driven by promotional sales in online stores.
In a momentous achievement, the FTSE 100 index reached beyond the 8,000-point threshold for the first time on 16 February. Introduced in January 1984 with a foundational level of 1,000, the FTSE 100 represents the top 100 UK companies based on market capitalization. As previously discussed, a substantial portion of these companies have an international orientation, earning their revenues from overseas markets. The index's recent triumph largely stems from its defensive attributes, particularly its strong alignment with the oil and gas sectors. Concurrently, the financial sector has reaped benefits from the uptrend in interest rates.
In the US, the Producer Price Index (PPI) marked a 0.7% monthly ascent in January. This data mirrors the US CPI findings from earlier this week, indicating that the anticipated decline in inflation might not be as rapid or as consistent as some market analysts had projected.
Surprisingly, US initial jobless claims showed a dip for the week ending 11 February, implying a sustained robustness in the labor market, partly attributed to a decline in labor force engagement. Furthermore, US retail sales witnessed an unanticipated 3% monthly surge in January. This jump, the largest since March 2021, exceeded the market's prediction of a 1.8% increment. Collectively, this week's data underscores the resilience of the US consumer and labor sectors, hinting at a healthy economic status. Given the Fed's reliance on data, these recent economic signals will undoubtedly influence their upcoming policy decisions.