True Potential Morning Markets

As we look to the week ahead, Jeff Casson, Chief Investment Officer, looks at the recent US employment data which highlights a loss of momentum in the economy. Federal Reserve Chair, Jerome Powell, is scheduled with Senate & House Banking Committees with a focus on the improving inflationary and employment backdrop to keep the prospect of the September rate cut on the table. Moving over to France, the Eurozone’s second largest economy, we see further uncertainty introduced into the markets after the final round of voting.

Chris Leyland, Director of Investment Strategy and Matt Henderson, Portfolio Manager, discuss the PMI survey data from Europe, the UK and US and the broad theme across all regions of manufacturing being weaker than services. We then move over to the US where there are signs of the economy starting to cool and how the data points to a normalisation of labour markets. But how have asset markets in the US have reacted to the labour data?

Chris Leyland, Director of Investment Strategy, breaks down the figures from the Institute for Supply Management who provide a report on the US’ purchasing and supply executives. Despite a lower than expected performance in recent months it is backed by historically strong figures and investors are digesting the softer economic data positively as they believe it increases the chances of an interest rate cut in September. Do you believe this could be a step towards an interest rate cut?

Matt Henderson, Portfolio Manager, looks at the latest European inflation figures and while headline inflation continues to fall, core inflation remains sticky and unchanged at 2.9% driven by the divergence between goods and services. Moving over to the US, Federal Reserve Chairman Jay Powell made positive comments about disinflation re-establishing itself after a Q1 bump. However the Fed want further evidence from future reports before looking to reduce interest rates in the US as they wish to avoid starting another inflation cycle.

After a period of exceptional strength in the US economy, new survey data suggests that the US economy may now be slowing from prior elevated levels. Paul Durrans, Investment Director, looks at the recent construction and manufacturing figures which appear to support this cooling trend. In addition, with the imminent release of labour market data how may the path of interest rates evolve?

Jeff Casson, Chief Investment Officer, looks to the week ahead and the imminent UK general election as well as wider political influence on markets as well as cautionary comments from the Bank for International Settlements on re-igniting inflation. We also hear about the challenges on sustainable economic momentum in China over the recent months.

Faye Graham, Investment Analyst and Paul Durrans, Investment Director close out Q2 with a comprehensive discussion on the returns from equities and bonds. They discuss the primary drivers which range from AI to economic growth. However, they start by discussing today's US inflation data. They give insight to why the  inflation data is cooling and what more will be required for the US central bank to cut interest rates. The discussion is broadened out to understand the latest inflation developments in Europe and the UK.

As Q2 comes to a close, Paul Durrans, Investment Director, reflects on equity market performance in a quarter which has seen a number of markets reach new all-time highs. Paul discusses the complex interplay of strong corporate earnings, economic growth, the prospect of lower interest rates and AI.

Matt Henderson, Portfolio Manager, looks into why some investors are moving away from AI and semiconductor associated names which have seen great success and into the rest of the market. We also get a look into the consumer confidence data released yesterday and what it tells us about the US economy as well as a look ahead to the market expectations for the upcoming PCE (personal consumption expenditures) reading from the Federal Reserve.

All eyes are on Nvidia as George Bell, Portfolio Manager, looks at the recent share price drop of 16% just after it was crowned the most valuable company in the world. He also explores the resilience of the broader market despite the dip in the tech sector and the positive equity market returns in global markets.