Category: Market Update
Market Update: Markets catching up to reality
Following three weeks of ‘not a lot of news’ being good news for stock markets, bad news dented investor sentiment last week. This has coincided with some reversal of global liquidity as the US government is once again stepping up fundraising to replenish its coffers and Pan-European business sentiment surveys ticked down. No surprise then, that risk assets experienced a mild sell-off that reversed some of June’s gains. Hardest hit were China, Europe and the UK, but for inherently different reasons.
Market Update: Market conundrum amid volatile growth
Last week saw equity markets move higher yet, despite central bank hawkishness. We had another 0.25% rate rise from the European Central Bank (ECB) and, although the US Federal Open markets Committee (FOMC) left rates unchanged, they gave us strong hints of at least another 0.25% hike in July. They also indicated their expectation for rates to stay higher for longer than many think.
Market Update: Immaculate disinflation sentiment cheers investors
Another positive week in global stock markets, which seems unremarkable given it has been fairly good since the beginning of May. However, looking more closely – as we do – two market dynamics tell us more market participants are warming up to the narrative that bringing inflation under control while still achieving a soft landing for the global economy may be what 2023 brings. First, stock market gains over the past few weeks have been spreading to the mid and small cap market segments, rather than coming from just a handful of mega-cap stocks. Second, falling inflation expectations mean recent...
Market Update: Markets take good news in their stride
In previous weeks, we've noted how the absence of specifically good news meant markets reacted more negatively than expected to the relatively low probability of a US debt default. We pointed out that the more notable event of the weeks have been bond yields once again surging.
Market Update: Debt ceiling angst or simply lack of good news
Compared to last week, markets did not really get much ‘new’ news to digest, and yet this week brought a renewed bout of equity market volatility. Given bond yields experienced even larger moves (up), speculation has been blaming the latest market wobble on the unresolved US government debt ceiling negotiations.
Market Update: Big tech stocks increase is ‘artificial’
Last week we wrote that markets were facing growing risks. Since then, and at the time of writing, equity markets have generally headed higher. Japan has been enjoying a particularly good run with the Nikkei 225 making gains every day since last Wednesday. This has occurred despite some disappointing economic data and a weakening currency (we’ll return to the currency moves in a moment). However, the most notable moves have been in US stocks, with the large-cap tech names doing very well in aggregate.
Market Update: Trust the MPC to rain on May’s parade
After a period where it felt like there was a shortage of news, things are hotting up. Both equity and bond markets are bearing up well generally but, in our estimation, underlying risks have increased since May started.
Market Update: Inflation running out of money
Over the past few weeks, we have observed how markets have been hanging in a fine balance, as evidenced by the rather directionless and decreasingly volatile bond, equity and currency markets. We are not the only ones who see it that way...
Market Update: Prospects of a warm Spring
Focusing on the UK economy, last week’s data told us that while March was cold, the Spring could be getting economically warmer. This morning’s UK retail sales data for March marked another reduction in volumes, partly due to the cold weather, according to the Office for National Statistics (ONS). Not including fuel, the volume of retail goods sold in March dropped by 1% from February. Food price rises continue to outpace price rises in other goods (nobody is fooled by milk price cuts when the price of bananas rises more than 10%).
Market Update: Return of calm bodes well for Spring
Easter lies behind us and the second quarter of the year ahead. Considering how unnerving the first three months of the year were, UK investors in globally-diversified multi-asset portfolios have not fared too badly. Mildly positive returns across the risk spectrum tell the story of another risk storm having passed without sinking global capital markets.
Market Update: Spring of hope following winter of doom?
This year began in anticipation of imminent global recession, but imminent did mean immediate, and as the second quarter gets under way, the chances of a global recession may be less now than they were.
Market Update: Markets put bank stress behind, but challenges remain
The first quarter of 2023 is now behind us, and while March ran run the whole gamut of emotions for investors, we end the month (and quarter) on a fairly positive and quiet note. For the average UK investor who holds their investments in a range of risk profiled portfolios, the quarter ends at levels above, or at worst, fairly close to where they started the year, so not really a ‘down’ quarter after all.
Market Update: UK Inflation Shocker
Britons got an unwelcome surprise last week. Inflation, as measured by the consumer prices index (CPI), climbed 10.4% year-on-year in February, higher than January’s 10.1% figure and above economists’ expectations. Before this news, things were looking better for the UK economy, albeit only slightly. Falling fuel prices, easing global input costs and a small but consistent slide in monthly inflation had suggested ‘peak’ inflation was behind us, a view even endorsed by the Bank of England (BoE). Market rumours were that the central bank might slow down or even suspend its interest rate rising cycle in response.
2023 Spring Budget Highlights
Jeremy Hunt delivered his second statement as Chancellor of the Exchequer with a Budget focused on growth and the structural issues within the UK economy. The issues he addressed included labour participation, business investment, innovation and productivity.
Market Update: Mood Swings
For some time, bond and equity markets have been experiencing teenager-like mood swings. As February ended and March began, government bond yields continued their march higher to levels last seen last autumn, when stock markets tumbled as a result. Yet this time, stock markets have ricocheted between optimism, namely the surprising resilience of consumer demand and resulting relative company earnings stability, and pessimism that the same economic resilience will keep inflation pressures high, forcing central banks to keep raising rates higher for longer, which undermines valuations and said resilience.
Market Update: Balancing Acts
Last week has seen global stock markets give back a portion of the gains made in the first few days of February. Still, since the start of the year global stocks have made a total return of around 5% in £-sterling terms (Source: Bloomberg)...
Market Update: A dose of realism creeps in
Last week, the UK’s leading stock market index, the FTSE100, finally passed the psychologically important threshold of 8,000. And yet, after the strong start to the year in January, February has brought consolidation rather than a continued uptrend.
Market Update: A challenging week brings investors back down to earth
Overall, UK bond and equity markets slipped back last week, despite the FTSE 100 edging higher until Thursday lunchtime when it reached a new all-time price high of 7494.57. Since last week’s US employment data, the asset market rally has had a key component weaken. In January and early February, investors had spied a decline in longer-term inflation pressures, but investors have become less sure in recent days.
Market Update: Are central banks transforming from hawks into doves?
Last week has been like the other four weeks of 2023: dominated by central bank action, inflation, and despondency over the UK economy. Meanwhile, stock and bond markets stayed buoyant. The monthly US jobs report could have upended the week but so far, after a brief market wobble, much of the week’s gains have been retained (we write before the close of trading). Indeed, the FTSE 100 may even close at a historic high today.
Market Update: Goldilocks in the air
Recent macroeconomic data releases across the western world report declining rates of inflation and no longer overheating (but nevertheless still positive) economic growth. In the US, the important milestone of the rate of personal consumption expenditure inflation falling below the interest rate has been reached. Perhaps unsurprisingly then, the term ‘Goldilocks’ (not too hot, not too cold) has returned to the market narrative.