Category: Market Update
Market Update: Central banks challenge Goldilocks assumptions
The apparent acceptance of later rate cuts kept markets going during January, but may be put to the test in February as US regional banks creak, once again, under the increased cost of refinancing.
Market Update: Positive growth sentiment returns
January is beginning to shape up rather nicely, after both positive growth sentiment as well as surplus liquidity staged a welcome return
Market Update: Data vs Davos
Was it the latest market data making early and substantial interest rate cuts unlikely, or the latest ‘news’ from leaders gathered in Davos, that caused bond yields to rise once again?
Market Update: A bumpy upwards path ahead
After the recent rally valuations feel elevated, yet the biggest risk to them is not whether the economy will grow again, but rather how fast.
Market Update: After the party, the hangover?
Following the impressive Santa Rally markets started 2024 on a less euphoric note, is this simply a correction from overbuying, or a genuinely bad start?
Market Update: Central bank Elves boost 2023 Santa rally
The scrooges of last year’s Christmas, US central bankers, put markets in a warm festive mood this week by surprisingly declaring ‘peak rates’ - is the US getting ahead of Europe and the UK once again?
Market Update: A bit of a downer
We review November’s cheery asset performance below. Early December is also currently on a positive track and trading volumes have been higher than November’s averages generally, suggesting quite a bit of capital is being put to work by investors.
Market Update: Higher for shorter on the horizon
As we have written here over the past weeks, the distinct turn in sentiment that drove markets in November was, once again, mostly about central banks and the likely path of interest rates. After October was about ‘higher for longer’, early November transitioned to ‘no more rate rises and the next move is down’, when inflation came down far more than most had expected. In this past week, we have heard discussions of Eurozone rate cuts in time for Easter.
Market Update: US economy slows to our pace
November remains a positive month in capital markets, although equities had a neutral week and longer bond prices have fallen back. UK government bonds (Gilts) have been the best performing bond market in the past few weeks, but the tax cuts announced in Wednesday Autumn Statement, although relatively minor, were enough to push the ten-year Gilt yield back up above 4.25% (rising yields mean falling bond prices).
Market Update: Inflation genie back in the bottle?
Last week was another good one for most investors. In sterling terms, the strongest equity markets were in Europe with the DAX up 4.5% since last Friday afternoon. The biggest winners have been small and mid-sized firms; the FTSE 250 has stormed up by 4.3% compared to a 1.4% increase for the FTSE 100. Likewise, the Russell 2000 (America’s most-watched market index for small and mid-sized companies) is up 5.1% in US dollar terms.
Market Update: Back pedalling central bankers
The turnaround rally in stock and bond markets – started by the previous week’s dovish central bank comments – petered out towards the end of last week, with central bankers seemingly at pains to reverse their messaging or at least reaffirm their continued commitment to keeping interest rates high however long it takes to get inflation back to their 2% target.
Market Update: Dovishness proves contagious
Just how much change a week can bring to markets was amply visible during the last seven days. Last week, we wrote about how negative sentiment in stock markets can turn into a self-perpetuating destructive force for an entire economy as the investing public feels the heat of being poorer (at least on paper). At the end of last week, we look back at pretty much a reversal of the previous week’s perspective after stock markets staged an impressive bounce back. Monday’s rally was still dismissed as an entirely predictable trading-based short-term reversal from oversold levels.
Market Update: The resilience narrative comes under pressure
A potentially meaningful change in correlations happened last week. In recent times, a fall in yields (and therefore a rise in bond prices) would go alongside rises in equity prices, particularly the mega-cap growth consumer-related techs like Amazon, Alphabet (Google), Microsoft and Apple.
Market Update: Bond yield volatility has markets guessing
While we hold our breath over the Middle East tragedy, markets return to interpreting if bond yields are just enough to eradicate inflation or if their volatility points to something bigger.
Market Update: Capital markets and war
If the attack on Israel last week felt as epoch changing as 9/11, then markets seemed to show determined apathy – or did they?
Market Update: Recession fears creeping back
Financial markets are in one of those occasional periods where the world’s economic realities do not quite seem to match what some asset price moves seem to want to tell us.
Market Update: Economic resilience is about to be tested
Historically September has on average not been great for investors, and as it turns out this year is no exception to that norm. Both equities and bond valuations have declined and even though equities have not materially moved up or down when looking across the past four months, there is increasing sentiment that the 2023 market recovery is running out of steam or may even be turning.
Market Update: To yield or not to yield
US bond yields rose again, yet UK and European bond yields did not. We reflect on what this tells us about the prospects for growth, and both near and long term investing.
Market Update: Central bank hawks determined to defang inflation
The European Central Bank (ECB) raised rates yesterday, with the majority of its Governing Council members concerned that the inflation parasite may be alive for a while longer. Of course, parasites can continue to be robust while their host becomes pale and wan.
Market Update: Energy in focus – oil prices up and an ill wind for renewables
Markets have been generally quiet at the start of September but energy is again becoming an issue for equity and credit markets. Oil prices have risen since the start of the summer, with Brent crude having bounced along a bottom of $73 per barrel for the first half of 2023.