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.
It was a strong week for markets as the Nasdaq 100 ETF powered forwards, gaining 3.93%, followed by the S&P 500 ETF, which added 2.43%. The FTSE 100 ETF (1.88%) and the Dow Jones ETF (1.12%) were also up for the week.
Unsurprisingly, technology led for the week with the sector ahead by 4.44%, followed by Materials (3.74%) and Energy (3.60%).
News.
China stepped up measures to boost the country’s faltering economy on Friday, with top banks paving the way for further cuts in lending rates and sources saying Beijing plans further action including relaxing home-purchase restrictions. As part of the support measures, Chinese authorities also reduced the amount of funds institutions need to hold in foreign exchange reserves. The measures cheered investors, and analysts said they should prevent a further downturn in the struggling property sector.
Geopolitics.
US commerce secretary Gina Raimondo wrapped up a trip to China on Wednesday with a pledge to make a new mechanism for resolving commercial differences work better than past initiatives. Speaking in a Boeing hangar in Shanghai before departing for the US, Raimondo insisted the planned “commercial issues working group” would succeed where past such schemes were sidelined amid frictions between the world’s two largest economies.
Inflation.
Euro zone inflation proved unexpectedly stubborn this month although price pressures for underlying goods eased. Overall inflation in the 20 countries sharing the euro was unchanged at 5.3% in August, defying expectations for a drop to 5.1% as energy costs rose sharply over the month, Eurostat data showed on Thursday. But a key underlying measure that filters out volatile food and energy prices eased as expected to 5.3% from July’s 5.5%.
Central Banks.
European Central Bank policymakers kept a September rate hike on the table when they raised interest rates in July, although some of them argued that another move would be deemed unnecessary when new economic projections were released, the accounts of the meeting showed on Thursday. The ECB has lifted rates from minus 0.5% to 3.75% in just over a year to fight a surge in inflation.
Commodities.
Things are heating up in the energy market as Natural Gas (9.03%), WTI Crude Oil (7.71%) and Brent Crude Oil (5.59%) were sizably up, stemming from a cut in oil production by OPEC +, which is designed to raise price levels.
Despite the headwinds of declining oil production, Hurricane-induced facility closures in the US, Gasoline and Heating Oil contracts fell by 8.32% and 4.71% respectively.
ESG.
Apex Clean Energy announced that it has signed a 189 MW power purchase agreement (PPA) with Google for renewable energy generated from the upcoming North Carolina-based Timbermill Wind project. The deal, the first PPA between the companies, represents the full capacity of the new project, expected to begin full commercial operation in 2024-2025.
Week Ahead.
The first week of the month is one of the busiest in the Macroeconomic calendar, with the US, UK and EU all reporting their Services and Composite PMI (Purchase Manager Indices) figures. Only the US is expected to report growth in services and overall as the UK and EU still wrestle with higher levels of inflation.
On Thursday the EU releases its GDP figure, which is expected to show slowing growth of 0.6% (1.1% prior).
Sources.
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo & 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 – China ramps up economic support as Country Garden vote looms, by By Ziyi Tang, Clare Jim and Xie Yu, Reuters, 01/09/23
Inflation – Stubborn euro zone inflation fails to settle ECB rate debate, Reuters, By David Milliken, 31/08/23
Central Banks – ECB kept Sept rate hike on the table at July meeting: accounts, Reuters, 31/08/23
ESG – Google Signs 189 MW Renewable Energy Purchase Agreement in North Carolina, by Emily Fowler, ESG Today, 31/08/23
Geopolitics – US commerce secretary hails ‘new approach’ to China business frictions, by the Business Telegraph, 25/08/23
Commodities – Data sourced from Koyfin 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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