It suggests corporates are happier with the state of the economy and expect share prices to rise further this year. We also saw the Atlanta Fed Survey estimating extremely healthy economic growth in the US of 3.4% (up from 3% last month) in the first quarter of 2024.

The technology sector makes up a third of the index – a level not seen since the good old days of the ‘dot com’ era. Who can forget the days of ‘hope’ between 1998 -2000 and the extraordinary valuations placed on companies that never ever turned a profit. Comparisons are plentiful but today high valuations are arguably deserved given the exceptional profitability and cash generation of many technology companies. So do not expect the same ‘crash’ in prices that we witnessed in 2000-03 in technology names!

Turning to company news, Expedia, the American travel technology company saw its shares fall by a fifth as news of the sudden departure of its Chief Executive hit the tapes. It came with a warning about the effect of falling air ticket prices and the grounding of Boeing 737 Max 9 Fleet on its revenues.

For those interested in French companies – Hermes, the luxury goods company (best known for its Birkin bags) announced its fourth quarter 2023 sales rose by 17.5% whereas L’Oreal, the cosmetics company could only muster a 2.5% sales rise in the same period. The results and the stock market impact were clear as Hermes overtook L’Oreal to be the second largest valued French company behind LVMH (Louis Vuitton).

Investors should take note this week on Thursday when we see the first estimate of UK economic growth for the fourth quarter of 2023. The expected outcome is a marginal decline in activity of 0.1%, which if confirmed, would be the second consecutive quarter of negative growth – a technical recession!

However, forecasts are just that and the fact that households and businesses are feeling relief from falling energy prices, lower inflation and real worker pay increases may just be enough to avoid a shallow UK recession. Any bad economic news could place added pressure on the Bank of England to make early cuts in interest rates – at their next meeting in late March? It is best not to hold your breath on this happening given the recent dismissive rhetoric from Threadneedle Street!

On Friday, it is the start of the UK Bank results season with NatWest reporting its 2023 outcome. Profits across the major UK Banks are set to rise sharply thanks to the impact of higher interest rates. Could these results be the springboard for Chancellor, Jeremy Hunt to make good his intention to sell the government’s 38.6% stake in NatWest to retail investors? He did suggest it could take place in 2024 but indicated it could take to 2025/26 to fully privatise the Group. HSBC, Lloyds, and Barclays announce their results next week.

Finally, President Joe Biden suffered ‘the worst day of his presidency’ after a bombshell report found the US President had ’significant limitations in his memory’. Lawyers who interviewed Mr Biden as part of an investigation into his handling of classified documents said he could not remember when he was Vice President or when his son died of brain cancer. This headline would ‘confirm every doubt and concern’ voters have about Mr Biden. His current twelve-point gap in the latest opinion polls behind probable Republican Presidential nominee Donald Trump, and possibility of a change of leadership, will give investors something else to think about as we move closer to the November 2024 election.

On Tuesday it was revealed that annual US consumer price inflation unexpectedly accelerated in February to 3.2% and further away from the Federal Reserve’s 2% target rate. The increase was driven by higher accommodation costs, as well as prices for services such as healthcare and motor insurance.

A couple of days later, the US Producer Price Index report for February also exceeded forecasts. Wholesale prices increased 1.6% from a year earlier, the fastest rate since September, on the back of higher fuel and food costs.

The hotter inflation reports all but rule out the possibility of the Fed cutting interest rates at this week’s FOMC meeting. Money market futures are now pricing in less than a 1% chance of a rate cut and have pushed out expectations of a first cut to at least June.

The Bank of England’s Monetary Policy Committee will announce its interest rate decision on Thursday lunchtime and similarly no change is expected. The UK has higher inflation than in other developed economies and wage pressures suggests the BoE has a tougher battle than its peers. Excluding bonuses, average earnings grew at an annual rate of 6.1% in the three months to December.

In company news, shares in Adobe fell almost 14% on Friday after it reported its first-quarter results after hours on Thursday. Whilst its earnings beat forecasts, investors were unnerved by its subdued forward revenue guidance and several analysts cut their price targets for Abode shares.

The software design company warned that increased competition regarding its artificial intelligence products will weigh on earnings and second quarter revenue will likely fall a bit short of its previous guidance of $5.31 billion. Its announcement that will buy back $25 billion of stock did little improve sentiment on the day.

Shares in Scottish Mortgage Investment Trust rose more than 5% on Friday after it announced it will buy back £1 billion of stock over the next two years. The board of the FTSE 100 company approved the largest ever buyback by an investment trust in a bid to narrow the 15% discount at which its shares were trading compared to its net asset value (NAV).

Boosted by exposure to tech companies such as Amazon, Nvidia and Tesla, shares in the trust traded at a premium above NAV through much of pandemic but its holdings of private, unquoted companies has attracted some criticism from investors more recently.

Shares in Google’s parent company, Alphabet, jumped 5% on Monday on reports that it is in talks with Apple to licence its Gemini artificial intelligence technology to power some new features on the iPhone. The two companies already have a history of working together with Alphabet paying Apple billions of dollars each year for Google to be the default search engine in the Safari web browser.

The were contrasting fortunes for industrial metals last week. Cooper climbed to an 11-month high of more than $9,000 a tonne on the London Metal Exchange after Chinese smelters, which process half of the world’s mined copper, agreed to cut production as facilities which are no longer profitable.

Iron ore, on the other hand, fell below $100 a tonne for the first time since May, extending its decline to more than 26% so far this year. The slump reflects concerns over demand from China where its steel-intensive property sector is in crisis. Policymakers in Beijing have also resisted calls to ramp up spending on new infrastructure projects as it has in the past to stimulate the economy.

In energy markets, Brent Crude rose to a 4-month high of $86 a barrel following Ukrainian drone strikes on Russian oil refineries. In its latest report, the International Energy Agency also forecasts the oil market will be in a “slight deficit” this year, a U-turn from its earlier prediction of a “substantial surplus”. It cited the production cuts made by members of the Opec+ cartel to support prices and global consumption rising to 103 million barrels a day.

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The Chart of the Week highlights the UK government’s debt as a percentage of GDP, and on the right, you can see the average maturity of this debt. So, what’s all the fuss about? The market is concerned that the UK government won’t be able to pay its bills (debt). This is because the UK government announced several cuts to personal tax last week, which means they will take in less money from taxpayers and will need to issue government bonds (debt) to pay for these tax initiatives.

This included:

• Abolishment of the higher rate (45%) of income tax for earnings over £150,000
• Cutting of the basic rate of income tax by 1% from April 2023, from 20% to 19%
• The increase in the stamp duty threshold to £250,000