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The UK economy shrank between July and September, contracting by 0.2%, as the country heads into what could be the longest recession on record by the end of the year. Chancellor Jeremy Hunt stated that he would try to make the recession ‘shallower and quicker’ than predicted but warns that there are difficult decisions to be made. The country waits for his Autumn statement to be released this week.

Fed officials welcomed Thursday’s news showing that US inflation rose by less than expected last month, coming in at 0.2% below predictions. San Francisco Fed president Mary Daly stated however, that ‘One month of data does not a victory make’, suggesting that interest rate rises may still go ahead, albeit at a slower pace. While the report may mark a turnaround, inflation is still far ahead of the US’ target, and there is still a tough journey ahead.

The S&P 500 closed its best week since June following Thursday’s inflation report, as it raised hopes that the Fed will begin to slow its tightening campaign. In fact, the end of the week saw a sharp rise in all 3 major indices. The S&P rose 5.9%, The Dow Jones was up 4.1% and the Nasdaq Composite surged 8.1% on a weekly basis. The week marked a resumption of a comeback rally for the bear market, which began in mid-October.