Market Overview – 22/06/2021

The US Federal Reserve announced the increased likelihood of earlier than expected rate hikes which resulted in equities to fall significantly in the latter half of the week. With the hikes possibly to be introduced as soon as 2022, the Fed’s Chair Jerome Powell also commented on the central bank’s plan of slowing its bond purchasing although this is more of a plan of a plan for tapering. Nonetheless, US equities fell by more than 1.9% while Treasury yields also experienced volatility for the week.

In Europe, many of the central banks have previously echoed the view of the Fed, and therefore markets responded similarly to the announcement. Pan-European equities and the FTSE 100 slid 1.2% and 1.6%, respectively. The UK’s economy continues to expand at an accelerated rate having experienced another jump in inflation in May, rising to 2.1%, ahead of the Bank of England’s target. This is in tandem with UK payrolls figure rising for the sixth consecutive month with unemployment levels down to 4.7%.

Major markets in Asia also finished the week in negative territory. Japanese equities were down just 0.4% while Chinese equities fell 2.3%, its third consecutive weekly loss. Chinese economists are suggesting the country’s growth momentum is decelerating after economic data in May was weaker than expected.