As was widely anticipated the US Federal Reserve left interest rates unchanged on 13 December but accompanying commentary suggesting rates could be cut as much as 75 basis points in 2024 gave markets a big boost.

Federal Reserve chair Jerome Powell said that the US central bank is ‘not likely’ to hike further and that it is ‘very focused on not making the mistake of keeping rates too high for too long’.

Investors celebrated the ‘dovish twist’ sending the Dow Jones Industrial Average to a record high - closing above 37,000 for the first time.

The S&P 500 rallied to cross the 4,700 for the first time since January 2022 and the Nasdaq closed up 1.4%.

In the UK, the leading blue-chip index the FTSE 100 surged over 100 points on the Fed’s news with the pound moving higher against the dollar by 0.24% at $1.2648.

However, stocks subsequently lost some momentum on profit taking and comments from New York Federal Reserve president John Williams and Powell’s deputy who said interest rate cuts ‘are not a topic of discussion at the moment’.

The Bank of England mirrored the Fed’s decision by keeping rates on hold 14 December - at a 15-year high.

Andy Burgess, fixed income investment specialist at Insight Investment said: ‘In stark contrast to the US Federal Reserve, the Bank of England continued to try and strike a hawkish tone.

‘Although rates were left unchanged at 5.25%, three of the nine members of the Monetary Policy Committee (MPC) voted for a further rate hike and the Bank warned that it continued to see upside risk to inflation forecasts.’

As you read this the market will be absorbing inflation readings from the US and UK and investors will be eyeing US non-farm payrolls on 5 January 2024.

The first couple of weeks in January are busy for the UK retail sector (and shoppers alike) as they report on trading over the key festive period (see table). A recent warning from Superdry (SDRY) will prompt some nervousness.

The first to report in 2024 is sector bellwether Next (NXT). The retail titan will be reporting its fourth quarter trading update on 4 January. In terms of fiscal year 2024, Next has upwardly revised its pre-tax profit guidance.

Originally set at £875 million, the new guidance now stands at £885 million, marking an increase of £10 million. This came off the back of better than expected third-quarter sales.

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