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.
- Non essentials essential for oiling the wheels of FTSE 100
- UK economy under the weather due to strikes and …. The weather!
- “A Mars a day” … helps Earth “work, rest and play”
Market Recap.
The FTSE 100 ETF benefitted from the continued rally in oil, gaining 2.77% for the week. The next nearest competitor was the Dow Jones Industrial Average ETF which added 1.43%, follow by the S&P 500 ETF (0.87%) and the Nasdaq 100 ETF (0.16%).
At sector level, Utilities prospered (2.79%) while Technology faltered (-2.25%). However, a gain of 1.80% by the Consumer Discretionary sector, which counts Amazon as its top holding, showed that not all investors rotated into defensive equities for the week.
News.
Britain’s economy contracted in July after strikes in hospitals and schools, as well as unusually rainy weather weighed on output, according to official figures on Wednesday. The Office for National Statistics said gross domestic product shrank 0.5% in July from June, worse than all forecasts in a Reuters poll of economists that had pointed to a contraction in gross domestic product (GDP) of 0.2% from June.
Geopolitics.
Rishi Sunak says he is confident a trade deal will be struck between the UK and India after meeting with Narendra Modi at the G20 summit. Speaking after bilateral talks, Sunak said there was “hard work” ahead but that he was “confident there is a deal there to be done”. “Trade deals of this size and ambition are never easy”, he said, adding he would never put an “arbitrary deadline” on the agreement.
Inflation.
The European Central Bank raised its key interest rate to a record high of 4% on Thursday but, with the eurozone economy in the doldrums, signalled that the hike, it’s 10th in a 14-month-long fight against inflation, was likely to be its last. The central bank also raised its forecasts for inflation, which it now expects to come down more slowly towards its 2% target over the next two years.
Central Banks.
U.S. economic data showed inflation increased for August but did little to alter market expectations for the path of rate hikes from the Federal Reserve. The consumer price index increased by 0.6% last month, the largest gain since June 2022, as gasoline prices jumped, Labor Department data showed. Excluding the volatile food and energy components, the CPI increased 0.3%, moderated by a decline in prices for used cars and trucks.
Commodities.
Mars have announced a series of new climate-related goals, including a target to cut its carbon emissions in half by 2030, and to invest over $1 billion over the next three years to drive climate action. This forms part of Mars’ newly released Net Zero Roadmap, outlining the company’s action plan to achieve net zero greenhouse gas emissions across its entire value chain, which would eliminate around 15 million tons of emissions..
ESG.
The United Arab Emirates (UAE) has committed $4.5 billion to significantly scale up renewable energy development in Africa to 15 gigawatts (GW) by 2030. The initiative is the first of its kind between the UAE and Africa and seeks to unlock Africa’s capacity for sustainable prosperity. The projects will focus on solar, wind, and hydropower.
Week Ahead.
On Tuesday, the EU releases its CPI inflation figures, with both the Core and general inflation number expected to reduce by 0.20%. On Wednesday it’s the turn of the UK when its inflation figures are revealed, with some forecasts expecting a slight increase in headline inflation. The focus on Thursday shifts to the interest rate decision of the Bank of England, which is widely expected to increase the base rate by 0.25% to 5.50%.
Did you know…
Mars is the 4th largest privately held company in US. The company is entirely owned by the Mars family. Therefore, it is not in, and currently can’t be in, any institutional funds. So it will not be possible for Clever to ever invest in this stock.
Having said that, Mars actions may lead by example, and hopefully encourage others to follow. Additionally, is just shows that the ESG agenda is being taken very seriously by commerce throughout the world.
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 UK – economy stumbles in July as strikes and rain weigh, By Andy Bruce and David Milliken, Reuters, 13/09/23
Inflation – ECB raises rates to record high, signals end to hikesBy Francesco Canepa and Balazs Koranyi, Reuters, 14/09/2023
Central Banks – Dollar climbs as Fed expectations remain intact after CPI By Chuck Mikolajczak, Reuters, 13/09/2023
ESG – Mars Commits to Cut Emissions in Half Across Full Value Chain by 2030, by Emily Fowler, 14/09/23
Geopolitics – G20: Rishi Sunak meets Narendra Modi for trade talks – and is ‘confident’ of securing deal by Sky News, 09/09/2023
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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