Market Update

Markets update: Equity recover

By Business & Finance
19 February 2018
stocks broker markets

Equities shrug off inflation concerns with sharp weekly rise. Ian Slattery reports.

ian slattery zurich

Ian Slattery

Equity markets recovered strongly last week, with the S&P 500 seeing its best one-week local return in over five years, although dollar weakness negated these returns for Irish investors. The VIX ‘fear index’ also declined to below 20 after spiking close to 50 a week previously.

A stronger-than-expected January CPI reading in the US failed to derail equities, as market participants come to terms with rising inflation expectations. US Treasuries lost value as expectations of rising interest rates continue to gather momentum, with the ten-year yield (which moves inversely to price) briefly touching a four-year high on 14 February.

A stronger-than-expected January CPI reading in the US failed to derail equities

With the Q4 earnings season coming to a close, 76% of companies have exceeded earnings-per-share estimates, helping to underpin the positive price trends across equities.


The global index rose by nearly 3% in euro terms for the week, but remains in negative territory for 2018.

Hong Kong was the best performing of the major markets, up 5.5% in local terms.

Oil moved higher last week, and closed back above $60/barrel, helped by the weakening US dollar. Copper and gold returned 7.1% and 2.4%, respectively.

The ten-year US bond yield finished the week at 2.87%, with the 3% point being a key level to watch for in the coming weeks. The EUR/USD rate closed the period at 1.24 and EUR/GBP was at 0.88.


Wednesday 21 February

Euro area flash composite PMI data for February goes to print where both the services and manufacturing figures are expected to fall from their multi-year highs, whilst firmly remaining in expansion territory.

The FOMC minutes covering Janet Yellen’s last meeting as Fed Chair are released. No change in policy is envisaged with a rate rise in March broadly expected by the market.

US PMI data for February is also released where the services figure is expected to rise to 54 from 53.3, with the consensus predicting a fall in the manufacturing index from 55.5 to 55.

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