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Surging Growth, Shifting Odds
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White House Warns Time and Funds Running Out for Ukraine Aid
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Euro Zone Inflation Falls Again, Posing Challenge for ECB
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Powell: Premature to Pencil in Rate Cuts, Inflation Battle Continues
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UAE Unveils ALTÉRRA: $30 Billion Climate Investment Platform at COP28
Market Recap.
It was a strong week for the Dow Jones ETF (2.05%) and, in particular for mining equities, partly driven by the strength in Gold miners.
The FTSE 100 ETF (0.88%) and S&P 500 (0.44%) ETFs both made gains for the week. The Nasdaq 100 ETF fell by -0.53%.
News.
The US Bureau of Economic Analysis has revised its already strong GDP estimates for the third quarter upwards, raising them from 4.90% to 5.20%. The previous GDP data had already come in above expectations of 4.30%. Market odds for a Federal Reserve rate cut as soon as its March spiked, rising from 34.60% to 44.50%, according to the CME Group’s FedWatch tool. Odds for a rate cut by May also increased from 65.20% to 77.10%.
Geopolitics.
White House budget director Shalanda Young warned in a letter to Republican House Speaker Mike Johnson and other congressional leaders on Monday that the United States was running out of time and money to help Ukraine fight its war with Russia. President Joe Biden’s administration in October asked Congress for nearly $106 billion to fund ambitious plans for Ukraine, Israel and U.S. border security.
Inflation.
Euro zone inflation fell by more than expected for a third straight month in November, challenging the European Central Bank’s narrative that price growth is stubborn. Inflation has dropped quickly towards the ECB’s 2% target from levels above 10% just a year ago but policymakers have cautioned against excessive optimism. They warn that the “last mile” of disinflation could be more difficult and take twice as long as getting back under 3%.
Central Banks.
US Fed chair Jay Powell stressed that it is too soon to state that interest rates will be cut until the fight against inflation is won. Speaking at a fireside chat at Spelman College in Atlanta on Friday, Powell stated, “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so”.
Commodities.
The biggest gainer for the week was Wheat, which added 8.10%. The sweet turned sour for Sugar as it fell by 7.76%.
Precious metals featured too, with Gold and Silver up by 2.76% and 2.17% respectively.
ESG.
At COP28, the United Arab Emirates (UAE) announced the launch of ALTÉRRA, a new investment platform aimed at driving private capital towards climate investments, and on improving access to climate finance in emerging markets. Launching with a $30 billion commitment, the new platform is the largest investment vehicle for climate change action, according to the UAE, adding that it aims to mobilize $250 billion globally by 2030.
Week Ahead.
As ECB President Legarde speaks to guide the market on Monday, the US releases its ‘New Home Sales’ numbers (721k forecast, 759k previous) to guide on the health of the US economy as a whole. The US publishes Consumer Confidence numbers on Tuesday (101 forecast, 102 previous) with a slight contraction expected. On Wednesday, the US posts its GDP figures with 4.90% Quarter-on-Quarter growth forecast against 2.10% previous. On Thursday, Europe releases its latest inflation figures (2.80% forecast, 2.90% prior). And on Friday, all major economies release their Manufacturing PMI numbers, which are sure to drive markets.
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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 – US revises strong Q3 GDP numbers upwards to 5.2%, By Elliot Gulliver-Needham, Investment Week, 29/11/23
Inflation – Euro zone inflation tumble pits ECB against markets, By Balazs Koranyi, Reuters, 30/11/23
Central Banks – Federal Reserve News and Events, 04/12/2023
ESG – UAE Launches $30 Billion Climate Fund, by Mark Segal, Guardian, 02/12/23
Geopolitics – White House says it is nearly out of money to help Ukraine fight war with Russia, by Jeff Mason, Reuters, 04/12/23
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.
Regulatory Information:
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