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Bostic: Inflation Down, Cautious Optimism on Rates in 2024
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Frozen Fortunes: Natural Gas Heats Up
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BMW Powers Ahead: Munich Plant to Go All-Electric by 2027
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Taiwan Election Sparks US-China Tensions
Market Recap.
It was a good week for tech as the Nasdaq 100 ETF gained 1.98%. The S&P 500 ETF also performed well, adding 1.20%, whilst the Dow Jones Industrial Average ETF produced a relatively modest return of 0.36%. Only the FTSE 100 ETF was negative, returning -0.79%.
At sector level, Technology gained 4.41% whilst the pseudo-tech sector (Communications) added 2.46%. Energy was challenged for the week, falling by 2.36%.
News.
Britain’s economy grew slightly more strongly than expected in November but remains at risk of slipping into a mild recession. Gross domestic product (GDP) expanded by 0.3% after a fall of 0.3% in October, beating forecasts for 0.2% growth.
But output shrank by 0.2% in the three months to the end of November, figures from the Office for National Statistics (ONS) showed on Friday, more than the expected 0.1% fall.
Geopolitics.
China has accused the US of sending “a gravely wrong signal” to those pushing for Taiwan’s independence as Taiwanese voters chose pro-sovereignty candidate William Lai as their president in a historic election. US Secretary of State Antony Blinken sent Taiwanese president-elect William Lai a message of congratulations following the result whilst Beijing called the message a violation of Washington’s commitment to maintain only unofficial ties with Taiwan.
Inflation.
Consumer prices in December overall rose 3.4% from a year earlier, the Labor Department said on Thursday in the release of the monthly Consumer Price Index, more than the 3.2% economists polled by Reuters had expected. Several familiar categories accounted for much of the overshoot, with high shelter costs in particular accounting for close to two-thirds of the increase.
Central Banks.
Federal Reserve Bank of Atlanta President Raphael Bostic said inflation has come down more than he expected and is on a path today to reaching the Fed’s 2% goal, though it’s too early to declare victory. While Bostic was among the first policymakers to call for an end to Fed rate hikes last year, he has repeatedly called for keeping policy tighter for longer. He said in December that he expects the US central bank will cut rates just twice in 2024, in the second half of the year.
Commodities.
Natural Gas was the strongest commodity for the second week in a row, adding 12.72% as the Northern hemisphere is faced with record low temperatures with Chicago potentially dropping below -23c and Oklahoma City below -17.7c. Meanwhile in Calgary, Albertans are facing power outages owing to temperatures as low as -45c.
ESG.
BMW Group have announced that its Munich plant will be the first site in its global production network to transition to manufacturing only all-electric vehicles, with the transformation to be completed from the end of 2027.
Established in 1922, the Munich plant initially produced aircraft engines, transitioning in 1948 to producing motorcycles, and in 1952 to automobiles. The plant currently produces approximately 1,000 vehicles per day, of which roughly half are all-electric.
Week Ahead.
On Wednesday, the UK releases its inflation figures with 3.80% forecast compared to 3.90% prior. The EU publishes its inflation figures on the same day, with a slight rise forecast at 2.90% compared to 2.40% prior.
The US publishes its Initial Jobless Claims numbers, with 207k expected compared to 202k prior. ECB President, Christine Lagarde speaks to guide markets on Friday, whilst Existing Home Sales in the US are expected to remain unchanged at 3.82m.
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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 – Investors ramp up bets on rate cut next year after BoE meeting, Telegraph, 02/11/23
Inflation – Euro zone inflation and growth fall as ECB hikes bite, By Francesco Canepa, Reuters, 31/10/23
Central Banks – Wall Street indexes rally on bets of peak US interest rates, strong earnings, By Sinéad Carew and Amruta Khandekar, 02/11/2023
ESG – Toyota Ramps U.S. EV Battery Investment to $14 Billion, by Mark Segal, ESG Today, 01/11/23
Geopolitics – Blinken visits Iraq in bid to prevent Gaza spillover By Simon Lewis, Reuters, 05/11/23
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:
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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