Weekly podcast – Market overview
This week’s host, Head of MPS, Simon Doherty discusses the ups and downs of the past week with Head of Fixed Interest Research, Richard Carter and Jamie Maddock, Equity Research Analyst. Among the topics discussed – falling US benchmarks, Bank of England base rate expectations and much more.
This is a marketing communication and is not independent investment research. Financial Instruments referred to are not subject to a prohibition on dealing ahead of the dissemination marketing communications. Any reference to any securities or instruments is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it.
Market overview: Alan McIntosh, Chief Investment Strategist
Stock markets came under pressure last week with the MSCI All Country World Index falling 2%. Despite the recent weakness global equities remain higher by 6% year-to-date.
US benchmarks underperformed, falling 2.5% on the week although they continue to outperform for 2023, sitting on gains of 8.6%. Third quarter earnings reporting ramped up with five of the Magnificent Seven – all bar Apple and Nvidia - announcing their latest trading results last week. While there has been a fair share of good news across the updates, it is perhaps telling that none of these stocks have seen sustained share price gains since the announcements.
The softness has been reflective of overall market sentiment and US benchmarks ended last week around 10% from their recent peaks. Although stocks have struggled of late, the US economy is performing well with GDP figures for Q3 coming in at an annualised pace of 4.9% - the fastest level of expansion since 2021. Robust consumer spending has underpinned the strong level of activity, but a depleted level seen in data on personal savings has caused some to believe this is not sustainable.
This week will see the penultimate Federal Reserve interest rate decision of the year, with no change expected in the funds rate. Investors will also have a keen eye on the October labour market report, with employment gauges still showing little ill effect from the rapid rise in interest rates. Last week’s initial jobless claims showed a reading of 210k, in line with expectations and still at historically low levels. Yields on US 10-year Treasuries declined last week, ending at 4.92% after briefly trading through the 5.00% level.
The Bank of England are expected to keep the base rate at 5.25% this week, marking the second consecutive meeting of no change after 14 successive rate increases. The latest unemployment figures showed an increase to 4.2% in the three months through August, up from 4.0% in the March to May period. The Office for National Statistics used a new data series for the date, based on an updated methodology.
UK stocks outperformed global peers last week, though they still declined 1.5% leaving the market up 0.9% for 2023. The pound remains not far from its lowest level in six months against the US dollar, ending last week at 1.21. Gilt yields dropped 11 basis points on the week, closing at 4.54%.
To listen to all the past Weekly Comment podcasts click here or subscribe via the apps below: