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Despite US inflation data reaching a 40-year high, Australian shares gained for the second consecutive week. However, on Friday the ASX200 dropped 1%, with all but the materials sectors in the red. US consumer inflation for January rose 7.5%, far above the expected figure. The S&P US 2-year and 10-year treasury bond indices fell 0.5% and 1% in response. Goldman Sachs economists have increased their forecast for the Fed to hike interest rates 7 times this year, up from 5. On Friday, the RBA Governor Phillip Lowe said that if US inflation forced the Fed to raise rates faster than expected, markets are at risk of an “abrupt adjustment”.
On Friday’s ASX200 leaderboard, Unibail-Rodamco-Westfield (ASX:URW) made the most gains, closing 6.5% higher, after announcing a sale and joint centre to a French shopping centre, agreeing to sell 45% of Westfield in Paris. URW also reported its full-year 2021 results, which saw “tenant sales approaching pre-COVID levels” and its portfolio was valued at €54.5 billion as of the 31st December. Meanwhile the worst performer was language testing and student placement company IDP Education (ASX:IEL), after reporting its earnings. However, Goldman Sachs were pleased with the company’s half year results and have retained their BUY rating.
US equities closed lower, as worries of an imminent Russian invasion of Ukraine add onto the list of concerns about interest rates and inflation. The S&P500 closed 1.9% lower after the White House asked all US citizens to leave Ukraine. The Dow lost 1.4% and the Nasdaq dropped 2.8%.
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