True Potential Morning Markets

Our Investment Director, Paul Durrans, reviews the latest US inflation report, outlining that inflation has risen to 3.5% against the Federal Reserve’s target of 2%. This has been caused by strong consumer demand in the services industry, driving prices higher and boosting growth in the economy. How has rising US inflation and economic growth affected markets overall?

As we look ahead to announcements later this week, data remains strong and points to GDP expansion across all major economies. Our Head of Asset Allocation, Kevin Kidney, explains the remarkably positive forecast for US corporate earnings expectations over the next 3 years and how that sentiment is being shared globally, with equity markets being the primary beneficiary.

The British Retail Consortium have reported the fastest rate of growth since August last year, exceeding the market consensus. Matt Henderson, portfolio manager, explains the contributing economic factors and highlights the easing in the cost of living crisis and UK wage growth, to be contributing factors to the improved figures.

The strength of the US jobs report last week has turned attention to the Federal Reserve and it’s decision on interest rate cuts, with speeches from many FED Board members in the past week, playing down the possibility of a rate cut in the near term. Jeff Casson, Chief Investment Officer, discusses the upcoming US CPI data, the minutes from the Federal Reserve March meeting as well as the upcoming ECB meeting and inflation data from China.

Our expert Investment Management team review the US employment figures which are exceeding market expectations, adding over 300,000 jobs to the US economy. They also cover the survey data for service and manufacturing for both the US and China, exploring the shifting dynamics within the Chinese economy and the nuances that come into financial forecasting.

US employment has exceeded expectations for growth with the highest rates of job creation since summer 2023. Jeff Casson, Chief Investment Officer, discusses the acceleration of wage growth in the US for those changing jobs, the ISM services data and the factors that play into the central banks difficulty in determining the trajectory for interest rates.

With downbeat forecasts on growth for China, Europe and UK at the start of the year, the positive revisions we have seen have led to a theme of global synchronised optimism and strong outcomes for portfolios in Q1. Kevin Kidney, Head of Asset Allocation discusses the consequences of such revisions and the divergence of inflation outcomes.

After the release of inflation data points from Europe and the US last Friday, Matt Henderson discusses the persistent disinflation trend seen in Europe and the released PCE data coming from the United States. New data on US manufacturing also shows signs of improvement, ending with Friday's key US employment report.

On today’s Morning Markets, Chris Leyland, Director of Investment Strategy, focuses on the biggest drop to Yen against the Dollar in over 30 years and the reaction of policy makers in Japan. With import prices being driven up and cost of living increasing, there is an expectation of intervention. Also we look ahead to the release of US inflation data this Good Friday.

On today’s episode we look into the first positive readings for UK retail sales in 11 months and what that could mean for economic growth. Portfolio Manager George Bell also talks about the developments in the energy sector, the increase in oil prices and Russia’s orders to cut oil output in order to meet OPEC+ targets.