Market Update

From the provided table, it's evident that global equity markets faced turbulence this week. Enhanced corporate earnings reports and economic data suggest a sturdier global economy than previously estimated. This, in turn, intensified speculations about a sustained monetary tightening by central banks.
For instance, February's PMI data for the UK revealed a resurgence in business growth—the first since the previous July—with a score of 53.0, where 50 denotes the threshold between expansion and contraction. While January's reading was 48.5, consensus estimates had projected only a slight uptick to 49.0, which would still be below the expansion mark. Similarly, the Eurozone and the US saw uplifts in their respective readings: 53.0 (up from January's 50.8) and 50.2 (a rise from 46.8).
There was also a significant boost in UK consumer confidence, even though it hovers near historic lows. Such resilience among consumers augurs well for the UK economy, given that consumer expenditure constitutes about 60% of the nation's GDP.
While such metrics bring relief by diminishing immediate recession concerns, they might prompt central banks to persist with rate hikes or maintain elevated rates for an extended period.
Fueling this sentiment were the minutes from the most recent Fed monetary policy session, released on the evening of 22 February 2023.
Even though the minutes largely reiterated known consensus—that inflationary tendencies were diminishing—they carried a slightly more hawkish undertone. Notably, several policymakers advocated for a heftier rate hike during the session, and a majority appeared inclined to further rate hikes in upcoming meetings. It's crucial to highlight that this meeting preceded the release of the latest robust economic indicators, which presumably will bolster their belief in the necessity for higher rates.