True Potential Morning Markets

With the US election result tomorrow, Chris Leyland, Director of Investment Strategy, looks at recent market movements and examines the impact on US assets as well as a look at the recent announcement from OPEC+ on oil supply reduction.

Kevin Kidney, Head of Asset Allocation, looks at the imminent US election and how it is currently affecting markets. While both candidates are not expected to change the US growth outlook, nuances in policy could affect wider markets such as in the UK where the Bank of England has a decision on interest rates. This places them as the first financial institution to have a decision on monetary policy and given the close relation of the US and US, markets will have a keen eye whether they decide to continue with a further 0.25% cut or change course following the budget announcement.

This morning, Matt Henderson, Portfolio Manager, rounds up the data from the European and US quarterly GDP reports. He covers better-than-expected growth in France and Germany, the strength of the US consumer, and a surprise spike in UK gilt yields as a reaction to yesterday's budget.

George Bell, Portfolio Manager, looks at further evidence from the US that the labour market is cooling as positions advertised but not filled fell to 7.4 million, the lowest since January 2021. The Consumer Confidence Index indicates an optimism about the future and equities remain resilient as corporate earnings season continues with a strength in technology but also in broader sectors as well which remains supportive of a broader equity market exposure.

Kevin Kidney, Head of Asset Allocation, looks at the bond market and government spending in both the UK and US. With the upcoming US election which is currently favouring a Trump win and his prior terms fiscal policy, we have seen a 0.6%-pt rise in borrowing cots. In the UK borrowing costs have also risen and with the government revealing their Autumn budget tomorrow, we will see the full extent of higher taxes and borrowing costs.

Paul Durrans, Investment Director, looks ahead to what will be a week full of important economic data with the US GDP, inflation and jobs reports coming in as well as corporate earnings from major tech companies such as Amazon, Apple, Google and Meta. In the UK we also have the first budget under the new leadership where a mix of greater government spending and higher taxes are expected.

This week, Kevin Kidney, Head of Asset Allocation and Matt Henderson, Portfolio Manager, look at how the bond market is reflecting the uncertainty of near term political events and how that is shaping markets. We look at the imminent UK budget and some of the press reports on potential policy and the upcoming US election which is polling at a 60% Trump victory.

Matt Henderson, Portfolio Manager, looks at the release of the Japanese PMI data which breaks down the outlook for both services and manufacturing sectors. Data indicates a slowing in economic growth ahead. We also discuss this economic data against the backdrop of an unusual shift in Japan’s economy that has seen equities return 20% over the past year.

Chris Leyland, Director of Investment Strategy, looks at US earnings season which is in full swing, with 100 companies having reported and General Motors being a stand out, having exceeded expectations for revenue and profits. In asset markets, the key area to pay attention to is Gold which just hit new highs being driven in part by tensions in the Middle East and uncertainty around the US election.

George Bell, Portfolio Manager, looks at the recent economic data coming from the US, illustrating a resilient and robust economy and how this could be shifting upcoming interest rate decisions. At the start of the month, market expectation were that there would be another 0.5% cut in November, however, these have recently shifted to a 0.25% cut.In China, further measures are being taken to stimulate the economy and ease financial conditions with a 0.25% cut to one and five-year loan prime rates.