2018 has begun on a positive note from an equity perspective, with the S&P 500 +2.6% last week, the best week for the index since December 2016.
US equities traded 0.7% higher on Friday, shrugging off the weak jobs figure, as gains in technology (+1.2%) and healthcare (+0.9%) offsetting marginal weakness in utilities and energy (both -0.1%).
Economic data has generally begun the year on a positive note. That said the employment data released on Friday missed expectations. The US economy added 148,000 jobs in December, falling short of the 190,000 expectation, while the unemployment rate remained unchanged at 4.1% for a third successive month, a 17-year low.
Inflation data in the US will likely be the key event for the week ahead, where price pressures are expected to remain muted. Earnings season will also come into focus this week with financial heavyweights JP Morgan, Wells Fargo and Blackrock all scheduled to report in the latter half of the week.
European equities broadly mirrored the performance of their US peers on Friday as the Euro Stoxx 50 index rose 1.1%. German, French and Spanish equities all closed more than 1% higher.
The UK’s FTSE 100 was a marginal underperformer for the session, rising 0.4%, and has been a marginal underperformer thus far in 2018, gaining 0.5% compared to the 3.0% and 2.6% return for European and US equities respectively.
Asian equities edged higher this morning ahead of the beginning of the earnings season this week. Japan markets were closed this morning for a public holiday.