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.
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Middle East unrest intensifies: Equities continue to suffer while Commodities make gains.
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UK Inflation remains stubborn, while slowly reducing in the Euro Area.
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Water and freshwater ecosystems’ value estimated as equivalent to 60% of global GDP.
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Moody’s: Britain’s outlook is now “stable”, a year after the mini-budget turmoil.
Market Recap.
Continuous unrest in the Middle East, along with rising yields and mixed earnings data in the US, dragged all major US indices lower, with the Nasdaq 100 ETF (-3.75%), the S&P 500 ETF (-2.91%) and the Dow Jones Industrial Average ETF (-1.970%) recording their worst week in a month. In the UK, the FTSE 100 ETF also reached its lowest point in two months (-2.90% for the week).
News.
Ratings agency Moody’s revised Britain’s outlook to “stable” from “negative” on Friday. “Policy predictability has been restored after heightened volatility last year around the mini-budget” the ratings agency said, affirming the country’s rating at Aa3. On Friday, Standard & Poor’s also affirmed its AA rating and stable outlook for Britain.
Geopolitics.
Fears that the Israel-Hamas war could evolve into a wider Middle East conflict rose on Sunday, with the US warning of a significant risk to their interests in the region. The US have deployed two aircraft carriers, support ships and about 2,000 Marines, to help deter attacks by Iran-affiliated forces. This week, Israel continued with missile strikes in Gaza, as clashes on its border with Lebanon against Iran-backed Hezbollah intensified.
Inflation.
Inflation in the UK remained at 6.70% in September 2023, while Core Inflation (which excludes volatile food and energy prices) was recorded at 6.10%, slightly lower than August’s 6.20%. In the Euro Area, inflation was confirmed at 4.30% in September 2023, down from August’s 5.20% and the lowest since October 2021. Core inflation was also confirmed lower at 4.50% in September, compared to August’s 5.30% readings.
Central Banks.
During a discussion at the Economic Club of New York on Thursday, the Federal Reserve (FED) Chair Jerome Powell mentioned that soaring bond yields are slowing down the economy and could cause inflation to ease. Although this could signal the end of interest rate hikes in the US, the FED’s decision to raises interest rates or not will depend on the economy’s resilience in the coming months.
Commodities.
Oil-derived commodities and precious metals advanced for the second week in a row following the escalation in the Middle East military conflict, although prices slightly eased after the Islamist group Hamas released two US hostages from Gaza at end of the week. WTI Brent and WTI Crude Oil gained 1.20% and 0.65% respectively, while Silver and Gold prices increased by 3.37% and 3.27% respectively.
ESG.
WWF released its report “The High Cost of Cheap Water” last Monday, providing the first ever annual estimate of economic value of water and freshwater ecosystems to $58 trillion, equivalent to 60% of global GDP. WWF International’s Director-General stated: “It is time for governments, businesses, and financial institutions to invest in protecting and restoring our freshwater ecosystems to ensure we build a future where water flows in abundance for all”.
Week Ahead.
Markets will anticipate the European Central Bank’s interest rate decision this week. In addition, the GDP growth rate for Q3, the Personal Consumption Expenditure (PCE) Price Index data and earnings reports from corporations such as Alphabet, Microsoft, Meta, Coca-Cola and Amazon will become available for the US economy. In the UK, the unemployment rate figure will also be released.
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Sources.
Christos Chountoulesis – Investment Analyst 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 – Moody’s lifts UK’s outlook to ‘stable’ on restoration of policy predictability, Reuters, 20/10/2023
Inflation – Data sourced from Tradingeconomics.com
Central Banks – Fed Chair Powell hints that soaring bond yields could mean end of rate hikes, by Bryan Mena, CNN 19/10/2023
ESG – WWF Report: Water crisis threatens US$58 trillion in economic value, food security and sustainability, by ESG News, 20/10/2023
Geopolitics – Israel pummels Gaza as US sees significant risk of attacks on Mideast interests, by Nidal al-Mughrabi and Dan Williams, Investing.com, 21/10/2023
Commodities – Data sourced from Koyfin and Investing.com
Week ahead – Data sourced from Tradingeconomics.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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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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