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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
US stocks notch largest weekly gains in two months
US stocks notched their largest weekly gains in two months as economic indicators showing easing inflation become increasingly apparent to the Federal Reserve.
Wall Street’s blue-chip S&P 500 rose 0.4% on Friday, taking the weekly growth to 2.7%. The Nasdaq Composite climbed 0.7%, taking gains over the past five sessions to 4.8%.
The indices had their largest weekly advances since mid-November, and notched back-to-back weekly gains following four weeks of consecutive losses across the board.
The week’s price rally was driven by data that showed annual US inflation had declined for the sixth consecutive month to 6.5%, the lowest consumer price index reading in more than a year.
Although investors are weighing the medium-term outlook for the sector against debate about a potential entry into recession later this year, lenders have briefly benefited from the Federal Reserve’s aggressive campaign to raise interest rates as it combats inflation.
US inflation falls to lowest in more than a year
US inflation was 6.5% over the 12 months to the end of December, down from 7.1% in November, the US Labor Department said.
That was the smallest increase in more than a year, and marked the sixth month in a row that the pace dropped.
Some items saw outright price falls in December compared with November.
Overall, prices slipped 0.1% over the month, driven by the observed fall in petrol prices across the nation.
Authorities in the US have been fighting to stabilise prices, which took off in 2021 as the economy roared back to life after pandemic lockdowns and companies facing shortages and rising costs hiked prices to unexpected heights.
However this new economic situation is being closely watched, as the slowdown from higher rates also risks tipping the world's largest economy into a recession.
UK economy defies expectations with unexpected November growth
The latest published data for the UK economy shows an expansion of 0.1% across the month of November, helped by demand for services in the tech sector in spite of households being squeezed by rising prices.
The Office for National Statistics (ONS) said pubs and restaurants also shared a boost in growth with the addition of the World Cup in November.
Although the November reading of gross domestic product was much better than anticipated, the overall picture still suggests the economy is currently stagnating as food and energy bills go up and people cut back as a result.
Economists have suggested that the latest data makes it less clear whether the UK will have entered a recession at the end of last year.
Sri Lanka's central bank urges China and India to reduce its debts:
The crisis-hit Indian Ocean state defaulted on its debt repayments and has looked to negotiate a $2.9bn (£2.4bn) bailout deal.
But the International Monetary Fund will not release the cash until China and India first agree to reduce Sri Lanka's billions of dollars of debt.
The economic turmoil sparked mass protests last year, which resulted in the former president fleeing the country in July.
The World Bank estimates that Sri Lanka's economy shrank by 9.2% in 2022 and that it will contract by a further 4.2% this year.
Beijing's lending to Sri Lanka stands at around $7bn while India is owed around $1bn.
The Sri Lankan government had initially hoped to agree a new payment plan with China and India by the end of 2022.
