Written by Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s Deputy CIO – Multi Asset, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
It was a negative week for most developed market equities last week. However, some emerging markets posted positive returns for the week. We saw a similar picture across fixed-income markets, with emerging market debt proving more resilient. Market trading volumes were generally light, due to the summer holidays.
US stock indexes fell last Friday, after US Federal Reserve Chair Jerome Powell said the Fed remains committed to extending its policy of raising interest rates, even at the risk of fuelling a potential recession. Powell said recent data showing a cooling of inflation “falls far short” of what the Fed “will need to see before they are confident that inflation is moving down.”
US President Joe Biden announced a $2.98 billion Ukraine military aid package, following Germany’s $500 million supporting package announced earlier last week. Meanwhile, Russian President Vladimir Putin signed a decree to boost the size of Russian troops by 137,000 to a total of 1.15 million.
A monthly inflation metric that the US Federal Reserve uses as its preferred gauge of price trends confirmed that inflation has recently decelerated. Consumer prices rose 6.3% in July from a year earlier, down from 6.8% in June, as measured by the personal consumption expenditures price index. Excluding volatile food and gas, prices rose 4.6%.
China cut its benchmark lending rate, the five-year loan prime rate, by 15bps to 4.3% last Monday, marking the second cut this year. This comes as the People’s Bank of China attempted to revive slowing borrowing demand, amid concerns of a Chinese property downturn and a resurgence of COVID outbreaks.
Oil traded above $93 per barrel last Friday, gaining 3% on the week, as investors weighed uncertain supply levels against the outlook of lower energy demand. Earlier in the week, Saudi Energy Minister bin Salman flagged the possibility that OPEC+ nations could cut oil production to counter the potential return of crude exports from Iran.
Amazon announced an agreement with hydrogen and fuel cell solutions company Plug Power for the supply of nearly 11,000 tons per year of green hydrogen starting in 2025, sufficient to power 30,000 forklifts or 800 heavy-duty trucks for long-haul transport annually. The announcement is the latest in a series of moves announced by Amazon over the past several years, aimed at achieving net zero emissions by 2040.
Markets will pay attention to US manufacturing data, which will be released on Thursday, and the US Jobs report, which follows on Friday. Also, second-quarter GDP growth numbers are being released for several countries, including India, South Korea, Italy, Canada, Brazil, and Turkey. Inflation rates for several European countries are also set to be released, including Germany, France, and Spain.
Sources: Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s Deputy CIO – Multi Asset, Marlborough’s Multi Asset Investment team, The FT, PIMCO, John Hancock, Morningstar, Trading Economics, and ESG Today.
Risk Warning: These are Nathan’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
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