This week

With the start of the week ushering in Valentine’s Day, relationships and all their different guises have certainly been under the microscope over the last few days, with global markets feeling very little love from investors.

The story a of a lover doing whatever it takes to win back someone who was once theirs, may be the folly of a Hollywood movie, yet tensions on the Ukrainian border with Russia are playing out more like a tragedy more than a story of romance. Stock markets fell heaviest on Thursday after Russian backed separatists and Ukrainian government forces accused each other of firing shells, sending investors to seek safety in perceived safe havens. The two sides traded accusations each had fired across the ceasefire line in eastern Ukraine, raising alarm at a time when Russia has amassed more than 100,000 troops on Ukraine's borders.

Ironically it was gold, much like for so many plucking up the courage to pop the question this week, that was the preferred choice of investment. Yellow metal prices made their way higher throughout the week, hitting an eight month high of $1,892 an ounce as investors flocked to safety. It was a choppy week on the commodity markets as a whole, with oil prices moving sharply in the opposite direction. Thursday also saw black gold tumble more than 2% on optimism that negotiations will salvage Iran's 2015 nuclear deal and bring more supply to an already tight market. 

On the economic data front, it was certainly a rosier outlook for the UK High Streets. Data released on Friday showed sales rose by 1.9% in January 2022 following a fall of 4.0% in December 2021 as the Omicron variant kept consumers at home. 

Sales volumes now sit 3.6% above their pre-coronavirus levels. Non-food sales volumes rose by 3.4% driven by home improvement sales (there might be some more coming after this storm finishes), with increased sales in household goods and garden centres. Interestingly, food sales fell below their pre-pandemic level for the first time.as consumers returned to eating out with anecdotal evidence suggesting higher demand for takeaways and meal-subscription kits over the month. 

By the end of the week, the feeling was very much “make love, not war” as markets cautiously tiptoed their way higher into the weekend.  Investors seemed to be pinning their hopes on high level diplomacy next week to avoid conflict in Eastern Europe after news that the U.S. Secretary of State agreed to a meeting with Russia's foreign minister, raising the prospect of ending the standoff over Ukraine.

Next week

With Storm Eunice set to batter the UK over the weekend, many investors will be hoping for the winds of change to blow through eastern Europe, as the coming week looks set to be dominated by events on the Ukrainian border with Russia. 

It will be in Europe where we start the week, with Monday seeing both Germany and France release their Services and Manufacturing PMI data, following by a bloc wide composite. With the Eurozone being a mixture of differing economies, some relying on services, others on manufacturing, the data should take on added significance as the bloc recovers from the Omicron variant. The data itself will serve as a leading indicator of economic health as businesses tend to react quickly to market conditions, with their purchasing managers holding perhaps the most current and relevant insight into the company's view of the economy.

We should more than breeze through the early part of the week as the US closes its markets in observance of President’s Day. However it does release its consumer confidence numbers later in the week. Detailing the results of a survey of about 3,000 households, asking respondents to rate the relative level of current and future economic conditions including job availability, business conditions, and overall economic situation, the data will be key to gauging how the US consumer is feeling.

The middle of the week sees focus shift onto domestic shores as Bank of England Governor and other Monetary Policy Committee members are due to testify to parliament. Although presumably their answers are only in draft form at the moment, the bank will tackle questions on inflation and their economic outlook before Parliament's Treasury Committee and should cause heightened market volatility throughout the duration.

The week should be rounded off back in the US as the nation’s Bureau of Economic Analysis releases its quarterly GDP figures. With a host of economic data from last week failing to live up to forecasts, economists will be hoping for a reading to be blown away by, especially as the Federal Reserve looks to hike rates more aggressively throughout the rest of the year. 

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in February 2022.