CleverAdviser
Markets Mixed as Earnings Begin
Eurozone GDP Exceeds Forecast
Oil and Gold Spike on Tensions
Growth and Inflation Data Awaited
Market Recap.
The Nasdaq 100 ETF (+1.42%) and S&P 500 ETF (+0.33%) led markets as earnings season began in the US. Industrials fared less well, with the FTSE 100 ETF (-0.71%) and Dow Jones Industrial Average ETF (-1.24%) both down for the week.
News.
Eurozone GDP grew by 0.4% in the third quarter of this year, twice as fast as the 0.2% growth expected. That follows Germany’s welcome dodging of a recession, and France’s Olympics-fuelled growth over the summer.
Statistics body Eurostat says:
Ireland (+2.0%) recorded the highest increase compared to the previous quarter, followed by Lithuania (+1.1%) and Spain (+0.8%). Declines were recorded in Hungary (-0.7%), Latvia (-0.4%) and Sweden (-0.1%).
Geopolitics.
Japan’s ruling coalition led by the Liberal Democratic party has lost its parliamentary majority, in a shock rebuke by voters that plunges the country into political uncertainty. The LDP’s worst electoral reversal for 15 years, which will leave the party struggling to govern and recently anointed Prime Minister Shigeru Ishiba under pressure to resign, came in a snap election he called to try to draw a line under a slush-fund scandal.
Inflation.
The rate of inflation in Northern Ireland was significantly below the UK average for much of 2023, experimental data suggests.
Figures from the Office for National Statistics (ONS) show that in March 2023 the UK rate was 10.1% while in Northern Ireland it was 6.9%. The position has reversed since October with the Northern Ireland rate trending above the UK average.
This is largely explained by differences in home heating between Northern Ireland and the rest of the UK. Most Northern Ireland households use oil for home heating while other parts of the UK mainly use gas.
Centeral Banks.
The People’s Bank of China (PBoC) maintained the one-year Medium-Term Lending Facility (MLF) unchanged at 2%. Separately, the Bank of Canada cut interest rates by 0.50%, last week, lowering the policy rate to 3.75%. The International Monetary Fund (IMF) revised its 2025 global growth rate forecast downwards to 3.2% during the World Economic Outlook press briefing yesterday, noting geopolitical and trade risks. The IMF upwardly revised the US GDP growth to 2.8%, while Chinese GDP growth was revised lower to 4.8% from 5.0%.
Commodities.
The price of oil rose 5% for the week, to $72 per barrel on Friday. The oil market has experienced significant volatility driven by Middle Eastern unrest and concerns over a potential disruption to oil supply. Gold rose to $2,740 per ounce on Friday, as geopolitical tensions in the Middle East and uncertainties surrounding the upcoming US election bolstered safe-haven demand.
ESG.
Southwest Airlines have announced the introduction of new items to replace single-use plastic from its flights, including a new bamboo cup for inflight cold beverages and a wood stir stick. According to the airline, the new items are anticipated to reduce its inflight single-use plastics by more than 1.5 million pounds annually.
The introduction of the new items follows the launch last year by Southwest of its updated sustainability strategy, Nonstop to Net Zero, which outlines the carrier’s path toward its goal of achieving net zero carbon emissions by 2050.
Week Ahead.
This week, in the US, economic growth and inflation data will be taking centre stage. The advance estimate for Q3 economic growth is anticipated to show the economy grew by 3%. In the Euro Area, the economy is expected to grow by 0.2%, mirroring last quarter’s pace. Inflation in the Euro Area is anticipated to increase slightly to 1.9% in October. It will also be a pivotal week for earnings, as mega-cap results are due from five of the ‘Magnificent 7’: Apple, Microsoft, Amazon, Meta and Alphabet.
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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 Eurozone beats forecasts with 0.4% growth, by The Guardian, 30/10/2024
Inflation Northern Ireland inflation diverges from UK rate, By John Campbell, BBC News, 30/10/2024
Central Banks Nathan Sweeney, Marlborough Group, 27/10/2024
ESG Southwest Airlines Eliminates 1.5 Million Pounds of Single-Use Plastic from Flights, by ESG News, 29/10/24
Geopolitics Nathan Sweeney, Marlborough Group, 27/10/2024
Commodities Nathan Sweeney, Marlborough Group, 27/10/2024
Week ahead Nathan Sweeney, Marlborough Group, 27/10/2024
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.
