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Industrials Make a Comeback: Dow and FTSE Lead the Charge
China’s Bond Bonanza
Hurricane Helene Blows Gas Prices Higher
Japan’s Bold Move: The Sazanami Strait Showdown
Market Recap.
As US markets paused, the FTSE 100 ETF (0.82%) gained the most, followed by the Dow Jones Industrial Average ETF (0.75%), showing that it was the turn of industrials to ‘catch a bid’. This was supported at sector level as US materials gained the most, adding 3.49% for the week.
The Nasdaq 100 ETF (0.51%) made modest gains whilst the S&P 500 ETF (0.10%) was broadly flat.
News.
China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of a fresh fiscal stimulus, adding to a string of measures to battle strong deflationary pressures and faltering economic growth. Part of the debt issue is intended to subsidise consumer goods purchases and child support, effectively transferring funds to households.
As part of the package, the Ministry of Finance (MOF) plans to issue 1 trillion yuan of special sovereign debt primarily to stimulate consumption amid growing concerns about a stuttering post-COVID economic recovery, said the sources.
Geopolitics.
A Japanese warship has sailed through the Taiwan Strait between Taiwan and China for the first time, prompting Beijing to lodge complaints with Tokyo.
The JS Sazanami, a naval destroyer, travelled south through the strait last Wednesday, accompanied by ships from Australia and New Zealand. It was on its way to military exercises in the South China Sea, Japanese media reported government ministers saying.
The passage is a significant move by Japan, which is thought to have avoided sailing its ships through the strait in order not to upset China, which claims self-governed Taiwan and the strait.
Inflation.
Slowing inflation in August buttressed arguments Federal Reserve officials used in defence of their decision to lower interest rates by half of a percentage point last week and prompted traders to bet the U.S. central bank will continue a fast pace of rate cuts as price pressures ease towards its 2% target.
Over the past four months the personal consumption expenditures price index stripped of volatile food and energy elements has been increasing at less than a 1.80% annual rate, according to data for August released by the Commerce Department on Friday.
Central Banks.
The European Central Bank (ECB) is likely to continue to cut interest rates at least through the first half of 2025, to a level between 2% and 3%, Dutch ECB governing council member Klaas Knot said on Tuesday.
“I would expect us to continue to gradually reduce interest rates in the coming time, also in the first half of 2025,” Knot said in an interview with Dutch TV programme Nieuwsuur.
“I don’t expect rates to return to the extremely low levels we saw before the pandemic. They will likely end up on a somewhat more natural level. I don’t know where exactly, but somewhere starting with a 2,” he added.
ESG.
Microsoft have announced a new purchase agreement with removal project developer UNDO, for the permanent removal of 15,000 tonnes of CO2 from the atmosphere using rocks and soil.
Founded in 2022, London-based UNDO develops carbon removal projects based on enhanced rock weathering. The company’s technology accelerates the natural geological process of weathering by spreading crushed silicate rock onto agricultural land, where plants and microbes in the soil speed up the weathering process, removing CO2, while simultaneously enriching soil with essential nutrients. According to the company, the process has the potential to scale rapidly to permanently remove billions of tonnes of carbon dioxide.
Commodities.
Copper (+ 6.84%) rallied hard amid a large stimulus package from the Chinese government, aiming to boost the Chinese economy as a whole. China is the largest consumer of copper, with the price of the metal closely linked to the health of the Chinese economy.
Natural Gas also added 5.36% for the week as Hurricane Helene caused precautionary shutdowns of offshore production in the Gulf of Mexico, reducing supply.
Week Ahead.
In the US, the jobs report is expected to show that the unemployment rate remained at 4.2% and wage growth may have slowed to 0.30%. Preliminary data is expected to show inflation in the Euro Area has dropped to the ECB’s target of 2.00%, the lowest since June 2021. In the United Kingdom, final Q2 GDP is likely to confirm 0.60% growth, following a 0.70% rise in Q1. The Nationwide House Price Index is expected to show a 0.10% increase, marking the eighth straight month of gains.
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Source:
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 Exclusive: China to issue $284 billion of sovereign debt this year to help revive economy, by Reuters, 26/09/2024
Inflation Latest inflation data could boost case for more big Fed rate cuts, By Howard Schneider, Reuters, 27/09/2024
Central Banks ECB’s Knot sees rate cuts through the first half of 2025, By Reuters, 24/09/24
ESG Microsoft Signs Deal with UNDO to Capture CO2 Using Rocks and Soil, by ESG Today, 30/09/24
Geopolitics Japan sails warship in Taiwan Strait for first time, by Kelly Ng & Rupert Wingfield-Hayes, 26/09/2024
Commodities Data sourced from Koyfin, EIA and Trading economics, 30/09/2024
Week ahead Nathan Sweeney, Marlborough Investment Group
Risk Warnings
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.
This document is a general communication being 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.
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Issued in the UK by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: Marlborough House, 59 Chorley New Road, Bolton, BL1 4QP. Registered in England No. 01947598.
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