Major indices headed lower in thursdays trading session as central banks across the world continue to raise interest rates.

BoE raises rates 50 basis points.

The BoE raised its key interest rate today by 50bp from 1.75% to 2.25% as forecasted. Even though the British economy could well be in a shallow recession already, the bank said it would continue to “respond forcefully” to inflation as necessary. Following Liz Truss’s plan to cap energy prices, the central bank cut its forecast for the peak in inflation to roughly 11% from 13% (investing.com). However, it has indeed warned that the policy may create price pressures in the long term. Furthermore, newly positioned finance minister Kwasi Kwarteng, is promising to cut payroll taxes which will take effect from November the 6^th. A fiscal statement is due to be made in parliament on Friday highlighting policies that investors think could cost more than £150bn (investing.com).

US jobless claims slightly rise, still close to lowest since May

Applications for US unemployment insurance rose from an almost 4-month low, clearly implying that the demand for workers continues healthy. Regardless of an increasingly uncertain economic outlook. Primary unemployment claims rose by 5,000 to 213,000 in the week ending September 17th (Bloomberg.com). The 4-week MA (moving average), which levels out the volatility week on week, fell to 216,750 (Bloomberg.com). Generally speaking, jobless claims have been in decline as employers are attempting to fill millions of open positions while maintaining its current workforce. Although, employment is expected to weaken as the Fed continued to hike interest rates.    

Costco beats quarterly revenue forecasts as strong demand continues 

The big gameplayer amongst retailers has released its Q4 earnings, with total revenue rising 15% to $72.10 billion, beating investors' average predictions of $72.04 billion (thomasreuters). In Q4 net income rose to $1.87 billion ($4.20 per share) from $1.67 billion (43.76 per share) compared to the previous financial year. In addition, Costco vastly benefits from strong spending by affluent Americans with club memberships, and despite supply chain disruptions alongside soaring prices due to the Ukraine war, the company’s efforts to maintain gas prices below the national average helped in drive of its sales (thomasreuters). However, shares fell 1.5% in trading as the company’s operating outgoings rose for Q4 due to increased labour and transport costs (thomasreuters).

General Market tone

Major indices fell in Thursday’s trading session as investors were unsure about the future impact of higher rates along with inflation. The Dow, S&P500 and Nasdaq100 all fell 0.35%, 0.84% and 1.17% respectively. Even though the BoE raised interest rates the pound continues to consolidate around the 1.13-1.1250 region, potentially suggesting a short-term bottom could be in place, though the medium-term outlook still remains negative. Natural gas continues to be volatile dropping over 6% today however oil continues to consolidate.