Written by Anthony Walters – Clever‘s Head of ESG & Christos Chountoulesis our Investment Analyst, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
Market Recap.
The Dow Jones Industrial Average ETF gained 0.10% this week (1.55% YTD) while the FTSE 100 ETF was flat, returning 0.03% (3.70% YTD). By contrast, the S&P 500 ETF fell by -0.47% (10.97% YTD) while the Nasdaq 100 ETF contracted by -1.43% (30.82% YTD).
US inflation of 3.2% was reported this week, up from 3.0% in July. This was lower than the forecasted 3.3%, however still remains higher than the 2% US Federal Reserve’s target.
News.
Britain’s economy unexpectedly grew by 0.2% in the second quarter against the consensus for a flat (0.0%) reading, according to official data. The latest data raised the possibility of higher interest rates, given the bank stressed this month that resilience in the economy was one of the factors that would underpin its judgement. The bank itself had forecast growth of 0.1%.
Geopolitics.
President Joe Biden on Thursday called China a “ticking time bomb” because of its economic challenges and said the country was in trouble because of weak growth. “That’s not good because when bad folks have problems, they do bad things,” Biden said. U.S. Secretary of State Antony Blinken recently completed a visit to China aimed at stabilising relations that Beijing described as being at their lowest point since formal ties were established in 1979.
Inflation.
U.S. consumer prices increased moderately in July as higher rents were mostly offset by declining costs of goods such as motor vehicles and furniture, a trend that could persuade the Federal Reserve to leave interest rates unchanged next month. US CPI (Consumer Prices Index) rose from 3.0% to 3.2%.
Central Banks.
The European Central Bank may pause a more than year-long rate-hiking campaign in September, according to economists polled by Reuters, but a further rise by year-end is still possible. There have been nine consecutive ECB rate rises since July 2022. But bank President Christine Lagarde paved the way for a pause by telling a news conference: “Do we have more ground to cover? At this point in time, I wouldn’t say so.”
Commodities.
Heating Oil (4.26%), WTI Crude Oil (2.12%) and Brent Crude Oil (2.10%) all made fresh gains this week, as the markets continue to expect a tight supply of oil-derived commodities, at least in the short term. China, the world’s top consumer of metals, and its economic recovery were also further assessed by the markets this week, which pushed the value of Copper lower by -3.05%.
ESG.
India’s greenhouse emissions rate dropped by a faster-than-expected 33% in 14 years as renewable energy generation rose and forest cover increased, according to two official’s privy to latest assessment made for submission to the United Nations. The report’s findings showed India well on the way to meeting a commitment to the United Nations Convention on Climate Change (UNFCCC), to reduce emissions intensity by 45% from the 2005 level, by 2030.
Week Ahead.
There are several important releases this week including: UK Inflation – CPI (7.9% prior), EU GDP (0.6% growth forecast, 1.1% prior), the release of the US Federal Open Market Committee meeting minutes and EU Inflation – CPI (5.3% forecast, 5.5% prior).
Sources.
Anthony Walters – Head of ESG, Christos Chountoulesis – Investment Analyst at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo, Tradingeconomics.com & Koyfin. ETFs quoted: iShares Core FTSE 100 UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Nasdaq 100 UCITS ETF (quoted in Pounds Sterling).
News – UK economy’s surprise strength puts more BoE rate hikes on table, by Andy Bruce and David Milliken, Reuters, 11/08/23
Inflation – US inflation cooling as consumer prices rise moderately again, By Lucia Mutikani, 10/08/23
Central Banks – ECB to pause in September, say slim majority of economists: Reuters poll, by Prerana Bhat, Reuters, 11/08/23
ESG – India succeeds in reducing emissions rate by 33% over 14 years, by ESG News, 09/08/23
Geopolitics – Biden calls China a ‘ticking time bomb’ over economic troubles, by Nandita Bose, 10/08/23
Commodities – Data sourced from Koyfin, Tradingeconomics.com and Investing.com
Week ahead – Data sourced from Investing.com
Risk Warning: These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
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