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Industrials Lead as Markets Consolidate
Pound Poised for Strong Performance in Global Currency Markets
Inflation Cooling Paves Way for Rate Cuts in US and Europe
Volvo’s Electric Trucks Set to Revolutionise Long-Distance Transport
Market Recap.
As markets are consolidating, the industrials continue to lead, with the Dow Jones Industrial Average ETF (0.77%) and FTSE 100 ETF (0.60%) leading the way.
The S&P 500 ETF (-0.17%) was broadly flat whilst the tech-focused Nasdaq 100 ETF (-1.17%) lagged for the week.
News.
The pound is set to be one of the world’s top-performing major currencies this year amid expectations of “above trend growth” in the UK economy and slower interest rate cuts, according to Bank of America.
The Wall Street titan said the pound is poised to hit $1.41 by the end of 2025, after hitting a 29-month high of $1.323 last Tuesday. Sterling is worth around $1.314 as of Monday morning. It has jumped 3.2 per cent against the dollar so far this year as money markets bet on more gradual interest rate cuts from the Bank of England compared to the US Federal Reserve.
Geopolitics.
Taiwan’s defence ministry said on Saturday it was monitoring “waves” of missile tests taking place in China’s far northern region of Inner Mongolia and that its air defence forces were on alert.
Democratically governed Taiwan, which China views as its own territory, keeps a close watch on all Chinese military activities given Beijing’s regular activities around the island, but only rarely releases details of what it sees taking place inside China.
Inflation.
Inflation cooled in the US and Europe, setting the stage for policymakers in both regions to lower interest rates in September. On a three-month annualised basis, the Federal Reserve’s preferred measure of underlying US inflation advanced 1.70% in July, the slowest this year. In Europe, consumer prices rose 2.20% in August from a year ago — the tamest since mid-2021 and significantly lower than the 2.60% pace a month earlier.
Centeral Banks.
The Governor of the Bank of France, François Villeroy de Galhau, has called for a further reduction in interest rates by the European Central Bank (ECB) in September, following the cut implemented in June.
In an interview with Le Point magazine, de Galhau remarked that a new rate cut would be “just and wise”, aligning with the ECB’s gradualist approach. “Our meeting on September 12 should, in my view, take action. It would be fair and wise to decide on a new rate cut”.
Commodities.
Oil prices closed the week at $73 per barrel, declining 1% for the week, as investors factored in the likelihood of rises in OPEC+ supply starting in October. Gold futures pushed their record levels higher for the fifth week in a row, and briefly topped $2,560 per ounce last Friday morning, up about 23% year-to-date.
ESG.
Volvo Trucks announced today plans to introduce a heavy-duty electric truck next year capable of traveling 600 km on a charge, marking a major expansion in range for its electric truck lineup based on new technology from the company. Anticipated to be released for sale during the second half of 2025, Volvo’s updated FH Electric will be able to reach up to 600 km on one charge, which the company said will enable transport companies to operate the trucks on interregional and long-distance routes, and to drive for a full working day without recharging.
Week Ahead.
In one of the busiest weeks of the month for data, the UK, US, and EU publish their PMI (Purchase Manager Indices) figures. The US and EU is expected to show contraction in its manufacturing whilst the UK is expected to report growth. European, UK and US services are all expected to report growth.
On Friday, the EU reports its latest GDP figures, with year-on-year growth expected to rise from 0.40% to 0.60%.
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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 Pound set to continue surge against dollar as interest rate cuts slow, By Lars Mucklejohn, CityAM/ Yahoo Finance, 02/09/24
Inflation Charting the Global Economy: Inflation Eases in US and Europe, By Molly Smith and Vince Golle, Yahoo Finance/Bloomberg, 03/09/24
Central Banks Bank of France Governor adds voice to calls for ECB September rate cut, By Piero Cingari, Euro News, 02/09/2024
ESG Volvo Unveils 600 km Range Heavy Duty Electric Truck, by Mark Segal, ESG Today, 03/09/24
Geopolitics Nathan Sweeney, Marlborough Investment Group
Commodities Nathan Sweeney, Marlborough Investment Group
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.
