Commodities surge this week as central banks pause
This week @ 1515 – Friday 30th January – London.
Markets:
- FTSE 100 rose 0.77% this week to 10,223, driven by a rally in the mining sector as gold and copper prices reached record highs.
- S&P 500 fell 0.32% this week to 6,946, driven by a cautious reaction to the Federal Reserve’s interest rate pause and mixed earnings from the technology sector.
- Nasdaq Composite fell 0.46% this week to 25,765, driven by valuation sensitivity and profit-taking in mega-cap tech following quarterly results.
- Euro Stoxx 50 rose 1.15% this week to 5,412, driven by strong gains in basic resources and defensive sectors.
Bonds:
- UK 10-year gilt yields rose 4 bps this week to 4.53%, reflecting higher-than-expected shop price inflation data from the British Retail Consortium.
- U.S. 10-year Treasury yields rose 1 bp this week to 4.25%, reflecting the Federal Reserve’s signal that interest rates will remain at current levels for some time.
Commodities:
- Brent crude rose 3.10% this week to $69.73, supported by increased geopolitical tensions and tightening supply forecasts.
- Gold rose 3.90% this week to $5,552, as investors sought safe-haven assets amid dollar weakness and trade policy uncertainty.
- Copper rose 9.00% this week to $14,307, driven by supply constraints and a surge in demand for AI infrastructure and green energy components.
FX:
- GBP/USD rose 0.51% this week to 1.373, as broad dollar weakness offset domestic inflationary concerns.
- EUR/GBP fell 0.20% this week to 0.834, as the pound strengthened on expectations of a slower pace of rate cuts from the Bank of England.
Macro:
- U.S. Federal Reserve maintained interest rates at 5.25% to 5.50%, with Chair Jerome Powell citing the need for further evidence of sustained disinflation.
- UK Inflation: BRC data showed shop price inflation accelerated to 1.5% in January, the highest rate in nearly two years.
- Geopolitics: Markets monitored fresh U.S. tariff threats against major trading partners, including South Korea.
Companies:
- Alphabet Inc: Reported a beat on top-line revenue, though capital expenditure on AI infrastructure remains a focus for investors.
- Microsoft Corp: Earnings highlighted continued growth in Azure cloud services, though guidance for the next quarter was conservative.
- ASML Holding NV: Bookings for advanced lithography machines met expectations, supporting the outlook for 2026 semiconductor demand.
- Shell Plc: Shares reached a 52-week high following robust cash flow reports and high energy prices.
What we will be keeping an eye on next week…
w/c 2nd February
- Central Banks: Interest rate decisions from the Bank of England, European Central Bank, and Reserve Bank of Australia.
- Macro: US ISM Manufacturing and Services PMI; Eurozone CPI; China Manufacturing PMI.
- Earnings: AstraZeneca, HSBC, and LVMH are scheduled to report.
Markets move constantly and the numbers in this update will change. This is a snapshot only, pulled together from a range of sources, and is meant as a quick guide rather than a precise record. It’s not investment advice and shouldn’t be used to make trading or investment decisions. If you need more accurate or specific data over a defined period, please get in touch with a member of the team who will be happy to help.
Important Information
This article is for information only and does not constitute advice or recommendation and you should not make any investment decisions based on it. The views and opinions of this article are those of Casterbridge at the time of writing and may change without notice. Any opinions should not be viewed as indicating any guarantee of return from investments managed by Casterbridge nor as advice of any nature. It is important to remember that past performance and the value of an investment, and any income from it, may go down as well as up and the investor may not get back the original amount invested.