Global stock-markets were mixed last week. In the US, the S&P 500 was up, the tech-heavy Nasdaq was strongly higher, large-cap Dow-Jones Industrials and small-cap Russell 2000 were down. European indices were higher and the momentum has continued at the start of this week – the FTSE 100 is up 1.5% this morning (Tuesday).
The big focus last week was the Jackson Hole symposium. US Federal Reserve Chair Jerome Powell spoke on Friday and said the Fed would “proceed carefully” – he cautioned that further rate increases are not off the table but the Fed’s future moves will be very much data dependent. He also reaffirmed that rates will remain elevated until inflation gets back to the central bank’s 2% target rate. There was a suggestion that rates will be held next month.
Consumers have kept the US economy from falling into recession and data has continued to be better-than-expected. This Friday’s jobs report will give a further update on how the economy is performing.
In the UK, preliminary estimates indicated that manufacturing had fallen to a three-year low. The S&P Global/CIPS UK Manufacturing PMI flash estimate fell for the thirteenth month and more-than-expected. The UK Services PMI was also seen to be contracting and again at a faster pace than expected. Following the reports the Pound fell with GBPUSD declining below 1.26 on Thursday, its lowest level since mid-June.
The Chinese stock-market reached a new year-to-date low on Friday and over the weekend Chinese authorities announced a reduction in the tax charged on trades in an attempt to encourage investment. Stocks rose strongly (more than 5%) intraday on Monday but gave back most of the gains by the close. Stocks rallied back on Tuesday and global investors will be watching to see if this continues.
UK Market Chart 25th August 2023
US Market Chart 25th August 2023
US Risk Barometer 25th August 2023
Europe Risk Barometer 25th August 2023
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