Written by Anthony Walters – Clever‘s Head of ESG, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
Market Recap.
The FTSE 100 ETF continued to outperform, adding 0.32%. The Dow Jones Industrial Average ETF (-0.58%), S&P 500 ETF (-1.45%) and the Nasdaq 100 ETF (-1.82%) were all down for the week as markets continued to navigate around persistent inflation and monetary policy.
Consumer Discretionary was hit hardest at sector level, falling by 6.15%. This was followed by Real Estate (-5.28%) and Materials (-3.62%).
News.
The Bank of England held its policy interest rate at 5.25% on September 21st, keeping borrowing costs at their highest level since 2008, as policymakers opted for a wait-and-see approach following the latest inflation and labour data. This suggested that the impact of previous policy tightening might be taking effect. It was the first pause in policy tightening in nearly two years, following the central bank’s unprecedented 5.15% increase.
Geopolitics.
The first big ship carrying grain from a Ukrainian Black Sea port has set sail since Moscow quit a deal in July to allow exports, a Ukrainian deputy prime minister said on Friday, part of Kyiv’s campaign to break Russia’s de facto blockade. The Aroyat “left the port Chornomorsk after loading 17,600 (metric tons of) Ukrainian wheat for Egypt,” Oleksandr Kubrakov said on the X social media app, formerly Twitter.
Inflation.
Inflation in the United Kingdom eased to 6.7% in August 2023 from 6.8% in the previous month, falling below the market consensus of 7.0%. This marked the lowest rate since February 2022, primarily due to a slowdown in food inflation and a decline in the cost of accommodation services. Additionally, the core rate, which excludes volatile items such as energy and food, dropped to 6.2%, the lowest rate since March and well below forecasts of 6.8%.
Central Banks.
The U.S. Federal Reserve held interest rates steady last week but stiffened a hawkish monetary policy stance that its officials believe can succeed in lowering inflation without damaging the economy or leading to large job losses. The Fed’s benchmark overnight interest rate may still be lifted one more time this year to a peak 5.50%-5.75% range, according to updated quarterly projections released by the U.S. central bank, and rates kept higher than expected, throughout 2024.
Commodities.
Metals led commodities this past week, with Aluminium and Silver adding 2.44% and 2.33% respectively. Gasoline continued its near-term downtrend, falling by -5.59%. Wheat declined by 4.29% amid increasing supply from the world’s top producers.
ESG.
HSBC has announced plans to allocate $1 billion in financing to support climate-tech startup companies around the world. The financing is expected to support start-ups in a variety of sectors, including EV charging, battery storage, sustainable food and agriculture, and carbon removal technologies. HSBC will also invest $100 million in ‘Breakthrough Energy Catalyst’, a platform that funds and invests in firms using emerging technologies to transition to cleaner sources of energy.
Week Ahead.
On Tuesday, US building Permits are published with a forecast of 1.54m compared to 1.44m for the prior month, signalling economic strength in housebuilding. On Thursday, US GDP is reported with ‘Quarter on Quarter’ GDP growth expected to be 2.2% compared to a prior reading of 2.0%. On the same day, US Federal Reserve Chair Powell speaks to guide the markets on monetary policy. And to cap the week, UK GDP figures are published on Friday, with GDP set to grow by 0.40% (year on year) compared to a prior reading of 0.20%.
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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 – Bank of England and Trading Economics, 22/09/23
Inflation – Office for National Statistics and Trading Economics, 22/09/2023
Central Banks – Fed keeps rates steady, toughens policy stance as ‘soft landing’ hopes grow, By Howard Schneider and Michael S. Derby Reuters, 20/09/2023
ESG – HSBC to Allocate $1 Billion in Funding to Support Climate-Tech Startups, by ESG News, 20/09/23
Geopolitics – First big grain ship leaves Ukraine’s Black Sea port by Pavel Polityuk, Reuters, 22/09/2023
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.
Regulatory Information: This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.
All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.
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