True Potential Morning Markets

Matt Henderson, Portfolio Manager, looks at the contrasting economic backdrops of Europe and the UK where in Europe we see higher interest rates and energy prices impacting the manufacturing sector. UK manufacturing is seeing a different outcome with new orders rising rapidly and output reaching a 2.5 year high which has caused an increase in employment. Similarly UK retail sales had their highest reading in 5 months with a 0.5% rise boosted by the warmer weather.

With the US interest rate decision on the horizon, Jeff Casson, Chief Investment Officer, looks at upcoming reports which will have a factor in the Federal Reserve’s decision. For investors, the main event is Friday and the unemployment report, looking back to August and the non-farm payroll data was the catalyst for a difficult start to the month, will September’s figures lead to a similar outcome? We also have the ISM manufacturing and services indices and the key focal point will be whether the manufacturing sector shows improvement despite being in contractionary territory. The date from Europe is anticipated to highlight the challenging backdrop for Eurozone manufacturing but show an ongoing recovery in consumer sentiment.

This week, Paul Durrans, Investment Director and Matt Henderson, Portfolio Manager, look at the comments made by the US central bank chair Jay Powell at the annual conference in Jackson Hole. Jay Powell gave his strongest indication yet that the US central bank is ready to cut interest rates next month. The key question is whether it will be a 0.25% or 0.5% interest rate cut next month? The team reflect on the latest economic growth and inflation data this week which will be important to the decision. The team also discuss the encouraging inflation data from Europe which is trending better than expected and should give the European Central Bank the confidence to lower interest rates again in the coming months. We finish on Nvidia which despite beating analyst expectations fell in value by -6.4%.

Kevin Kidney, Head of Asset Allocation, looks at the second quarter earnings data that came in yesterday that puts Nvidia ahead of analyst expectations with positive results and an approval of $50 billion in share buybacks, but why did the share price fall in after hours trading? We also look into the Richmond Fed Services activity data that corroborates the Federal Reserves intention to lower interest rates as of September and over in Europe, data from Spain will embolden the European Central Bank to further lower policy rates at next month’s meeting.

Today, Kevin Kidney, Head of Asset Allocation, digests the comments from Prime Minister Kier Starmer on the direction of the UK economy and the difference beween political aspiration and reality. With forecasts from the Office for Budget Responsibility reporting that welfare spending may increase 40% over the next 6 years whilst economic growth is expected to only increase 25%, more tax rises will be ahead.

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?