Weekly Market Recap

Week in review

European composite PMI improves to 52.3
U.S. composite PMI rises to 50.2
Australia wage growth 3.4% y/y for 4Q 2022

Week ahead

Australia real GDP 4Q 2022
China PMI for manufacturing and services
Australia retail sales

Thought of the week

Coming into the year it was a near certainty that the U.S. would fall into recession as consumer demand faded, corporate investment took a step back and fiscal policy became less supportive. So far economic data has surprised to the upside and better weather has had a positive impact on consumer activity in the U.S. and gas consumption in Europe. Last week’s developed market purchasing managers’ indices strengthened the review of a more resilient economy. The composite measure, which captures manufacturing and services sectors, is above 50 across Europe, the U.S., Japan and the UK which indicates an expansion in activity in these sectors. The turn is driven by the services sector, but manufacturing is also improving. However, the better economic outlook comes at a cost and may mean inflation is slower to fall. Central banks continue to lean hawkish in the face of better economic data disrupting the outlook for risk assets as bond yield rise. A U.S. recession is still probable this year but driven by a monetary policy overshoot.

On the up
Composite Purchasing Managers’ Index

Source: IHS Markit, J.P. Morgan Asset Management.
Data reflect most recently available as of 24/02/23.
All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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WEEKLY MARKET RECAP

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