Today, Paul Durrans, Investment Director, looks at the comments made at the annual Jackson Hole symposium which took place last week. Chair of the Federal Reserve, Jay Powell said “the time has come for policy to adjust’. This confirmed the widespread market expectation of an interest rate cut in September but the question is whether we will see a 0.25% cut or a 0.5% cut? Labour market data between now and September 17th when the Federal Reserve will next meet will be key to the decision. We also have corporate earning results from Nvidia this week . Nvidia's share price is now up 1000% since the stock market low in October 2022.

This week, George Bell, Portfolio Manager and Joe Forward, Investment Analyst, look at the key areas of strength we’ve seen in the global markets. Digesting a raft of economic data, reflecting on signs of a cooling US labour market and a more discerning consumer with evidence from some of the leading US companies. Though slowing, US economic fundamentals remain in good shape, with inflation cooling, the prospect of a September interest rate cut is becoming a more probable outcome. A tone reflected in the minutes from the July meeting, published this week. Next week, we will reflect on the key comments from Jerome Powell following his speech at the Jackson Hole Economic Symposium. The team also reflect on sentiment data from Europe and the latest inflation reports from Japan.

The release of today’s Purchasing Managers’ Index data from the Hamburg Commercial Bank suggests that services across Europe are continuing to expand, while the manufacturing sector remains a challenge for these nations. George Bell, Portfolio Manager, examines these numbers, looking at how events like the Olympics have helped fuel demand for services and what this could mean for the European Central Bank’s next interest rate decision.

#Markets #Services #Olympics

Paul Durrans, Investment Director, looks at the bounce back in global equity markets and the reasons why. The S&P500 is almost back to its July 16th all-time high. Looking ahead to the end of the week, all eyes will be on Jackson Hole, a three day conference of global leaders and policymakers. The most important speech at the conference will be the one from the Federal Reserve Chairman Jay Powell who will be giving his latest thoughts on the strength of the US labour market, the economy and what this means for the future path of US interest rates.

Today, Matt Henderson, Portfolio Manager, looks at some of the early impacts of the Bank of England’s interest rate cut in the form of housing demand and mortgage rates. Rightmove have reported a 19% increase in buyers enquiring about homes for sale from this time last year, with a large spike immediately after the Central Banks announcement. Historically there has always been a link between interest rates and property values and with signs of improvement, what direction will the further planned rate cuts take the UK housing market?

Matt Henderson, Portfolio Manager, looks back over the last few weeks in which we saw some market volatility and uses the opportunity to highlight the importance of longer term investment amidst short term change. Global equities returned 3.9% last week and a positive finish for global bonds made it a good week for multi-asset investors. As we look ahead to this week the FOMC (Federal Open Market Committee) meeting minutes are released in which markets will be looking for any hints as to the direction of future monetary policy. Later this week we also have the Jackson Hole symposium where global central bank leaders meet to discuss economic data and monetary policy.

With equities making a remarkable recovery this week and with market expectations for major central banks implementing several interest rate cuts by the end of the year, the economic backdrop looks constructive. Kevin Kidney, Head of Asset Allocation and Matt Henderson, Portfolio Manager look at data coming out of the UK and US where we see falling inflation rates for both economies with particular note that US headline inflation is now at a level we haven't seen since March 2021. UK employment surprised to the upside with 97,000 jobs added when markets expected 3,000 but wage inflation has seen its slowest growth since summer 2022. With 90% of corporate earnings reports in, most sectors have delivered positive results with some comments as to slower consumer spending due to higher interest rates. How long before the Federal Reserve take action on interest rates?

The pendulum has swung the other way in markets. Today, Kevin Kidney, Head of Asset Allocation, looks at the recovery in global equity prices since last week and the optimism on corporate earnings ahead as all major equity regions are expected to deliver impressive profits growth over the next 12 months. We also get a look into the market expectations of interest rate cuts in the US given the path of declining inflation pressures and whether the Bank of England is likely to stay in lock step with the FOMC’s (the monetary policy committee of the Federal Reserve) trajectory.

Matt Henderson, Portfolio Manager, looks at the UK inflation data which came through this morning. Markets did widely predict inflation to rise, however, the increase was below expectations in several readings which is a positive note for the UK's Bank of England. Matt walks us through the key elements of the readings and looks to the financial markets forecast for monetary policy from the Bank of England.

The latest data on the UK labour market shows improvements, with the unemployment falling, reversing its year-to-date trend. Wage growth remains elevated but the data this morning suggests a cooling. But what does this mean for the path of future interest rate?

Paul Durrans, Investment Director, looks into the key trends within the data and whether this will play a role in any interest rate decisions in the coming months.