market insight

Market round-up: 24 – 28 September 2018

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The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in September 2018.



The end of September marked a busy period for global markets, especially in the US, as news from both the White House and Wall Street kept investors on their toes.


Rosenstein at risk?


Investors woke up to a wave of uncertainty on Monday morning as question marks remained over the future of US Deputy Attorney General Rod Rosenstein, the overseer of the investigation into Russia’s role in the US elections. Confusion reigned after a flurry of contrasting media reports stated Rosenstein had either resigned or been sacked by President Trump himself. The news is significant as whoever would come in after him may well be viewed as the President’s hatchet man, crippling the Mueller Investigation into the US President’s dealing with Moscow.


The New York Times reported that Rosenstein had suggested secretly recording Trump in 2017 and was recruiting cabinet members to instigate an impeachment case against him. On the news, US stocks sank along with the dollar whilst treasury yields briefly fell before tracing their way back up above 3%.


Brexit talks at an impasse


Politics also helped to move markets on this side of the pond as Theresa May’s words from last week were still ringing in investor’s ears. Admitting that talks with the EU had hit an impasse, the government’s problems were compounded during Labour’s week long party conference, where Jeremy Corbyn announced his support for a second Brexit referendum if his party were to come to power. Although sterling initially fell, worries were soothed after May quashed any speculation that she would call a snap election anytime soon.


US Federal reserve


It was the US Federal reserve who set the tone for the rest of the week, raising rates by 0.25% on Thursday. The move was widely expected, with the markets pricing in a 100% chance days beforehand. Bumping up its policy target to 2-2.25%, the Fed also indicated that it foresees another rate rise in December, followed by three more hikes next year with little chance of a recession. Although striking a slightly hawkish tone, the content of their communication was little changed from their June projections, soothing investor worries over a steeper trajectory of tightening. With no surprises from the Fed, the USD sank against a basket of currencies including the Japanese Yen in turn, pushing the Nikkei to a 27-year high.


UK economic growth


On the economic data front, the week ended on a rather pessimistic note. Data released on Friday showed that although the UK economy grew in line with expectations over the quarter, numbers indicated that annual growth came in lower than consensus, at 1.2% versus estimates of 1.3%. Data showed that business investment also fell over the summer, remaining below its long term average.



The first week of October sees a relatively quiet start on the international stage, leaving us the opportunity to focus on more domestically orientated news. With the UK’s withdrawal from the EU still filling the nation’s column inches, the performance of the economy has taken on added importance of late.



Monday will see domestic manufacturing PMI data released; the primary measurement of how many goods the country is producing. Acting as a leading indicator of economic health, the survey will ask businesses their views on the sector based on their ability to react to changes in market conditions. Any reading above 50 will indicate expansion, with a score below showing contraction. Although the sector has been in expansion territory for the last two years, the rate of growth has been trending downwards recently, coming in below analysts’ forecasts and causing concerns for both the City of London and Westminster.



PMI data will form the backbone of the week with both Manufacturing and Services readings being released for the major European economies on Wednesday, including Italy. During the previous week, the Italian government announced they would target a budget deficit much higher than expected, putting it on a potential collision course with Brussels. Such a shock announcement for the heavily indebted nation is a concern for investors who judge the new radical government as not being fully committed to tackling its considerable debt load. The coming week’s data will make for fascinating reading, allowing us to see just how the under-fire economy is performing.



The first Friday of the month signals US Non-Farm data, possibly the most influential pieces of economic data released month-to-month. With the US economy seemingly firing on all cylinders, many will be hoping for a continuation of the consistently strong numbers.





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