Euro Zone Economy Grows 0.3% in Q1, Ending Stagnation
Taiwan President Calls for Peace Amidst Chinese Threats
UK Inflation Paving Way for Interest Rate Cuts
Bank of England to Expand Leeds Office to 500 Staff by 2027
Market Recap.
Markets paused for thought after exceedingly strong gains for the week prior. The Nasdaq 100 ETF (+0.95%), S&P 500 ETF (+0.41%) and FTSE 100 ETF (+0.33%) all made gains, even if they seemed moderate compared to the week before.
At sector level, technology led the way with a 3.06% return whilst industrials were the only major sector to retreat, posting a 0.28% loss.
News.
The euro zone economy grew by 0.30% in the first quarter of the year, suggesting a recovery is now underway after six straight quarters of stagnant or negative growth, Eurostat said on Wednesday. Among the biggest euro zone countries, Spain was the strongest performer in the first quarter with 0.70% growth while Germany, France and Italy were all at or just below the euro zone average.
Geopolitics.
Taiwan President Lai Ching-te has asked China to stop its military and political threats, saying in his inauguration speech that peace is the only choice and that Beijing had to respect the choice of the Taiwanese people.
China responded by saying Lai had sent “dangerous signals” that seek to undermine peace and stability across the Taiwan Strait. Lai repeated a call for talks with China, which views the proudly democratic island as its own territory and has never renounced the use of force to bring it under Beijing’s control.
Inflation.
UK Inflation is expected to fall to its lowest level in nearly three years when new figures are released on Wednesday, helping to pave the way for summer interest rate cuts.
Economists at the Bank of England expect the headline rate of inflation will fall to 2.10%, down from 3.20% in April. The reduction in Ofgem’s energy price cap at the beginning of April will be the largest contributor to the fall in inflation. This alone is expected to knock around 0.40% off the headline rate.
Central Banks.
The Bank of England has revealed a major expansion of its presence in Leeds as part of efforts to spread its work outside London. The Bank said its current operation in the West Yorkshire city, which has 70 staff, would grow to 500 by 2027. It employs just shy of 5,000 people currently which are spread nationally but most are based at the Bank in the City of London’s Threadneedle Street.
Commodities.
Silver added over 13% for the week amid optimism the US Fed will soon start cutting interest rates. Geopolitical tensions in the Middle East have also boosted the appeal of silver as a safe-haven asset. Wheat fell by 5.31% which appears to be a temporary pullback as concerns regarding supply disruption from bad weather continue.
ESG.
In a continued theme of decarbonisation for the Aviation industry, Boston Consulting Group have announced a new agreement to purchase sustainable aviation fuel certificates (SAFc) for fuel made using renewable energy and CO2.
Bought from carbon transformation-focused company Twelve, the new agreement will run from 2026 to 2029, and is expected to deliver more than 4,000 metric tons of CO2 emissions reductions.
Week Ahead.
On Monday, several members of the US Federal Open Market Committee are speaking to guide markets and European Central Bank President, Christine Lagarde, will provide further guidance on the Eurozone. UK CPI (inflation) figures will be released on Wednesday, with the market expecting 2.10% against 3.20% prior. And on Thursday, the EU, US and UK confirm their final PMI (Purchase Manager Index) numbers for the prior month, revising estimates accordingly, giving further guidance to manufacturing and services growth.
Sources:
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo & Koyfin. ETFs quoted: iShares Core FTSE 100 UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Nasdaq 100 UCITS ETF (quoted in Pounds Sterling).
News – Euro zone economy, employment expands by 0.3% in first quarter, by Reuters, 15/05/24
Inflation – Inflation set to return to two per cent target in boost for Bank of England, by Chris Dorrell, City AM, 19/05/24
Central Banks – Bank of England to grow ‘northern hub’ with 500 staff, Sky News, 17/05/2024
ESG – BCG Buys Sustainable Aviation Fuel Made from CO2 from Twelve, by Mark Segal, ESG Today, 17/05/24
Geopolitics – New Taiwanese president calls on China to stop its threats, By Yimou Lee and Ben Blanchard, Reuters, 20/04/24
Commodities – Data sourced from Koyfin and Investing.com
Week ahead – Data sourced from Investing.com
Risk Warning:
These are Anthony’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.
Regulatory Information:
This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.
All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.
CleverAdviser
