The infoshot to help kick-start your week
Last Week
- The Federal Reserve is expected to lower interest rates as inflation moderates and the labour market shows signs of cooling. The key question now is whether a modest rate cut will be sufficient to sustain economic growth in the U.S. Fed officials face a critical decision: to ease rates gradually or adopt a more aggressive approach by front-loading cuts. This debate is likely to be contentious. Under Chair Jerome Powell’s leadership, the Fed has previously been criticised for acting too late to address the most severe inflationary pressures since the early 1980s, which eroded household purchasing power. If the Fed moves too slowly this time, it risks increasing unemployment and potentially pushing the economy into a recession. Bond investors are closely watching to predict the pace and scale of the Fed’s actions.
- Recession concerns are resurfacing, and risk-on momentum in global equities is faltering amid growing fears of an impending economic slowdown. Asia’s benchmark equity index dropped to a three-week low following weaker-than-expected economic data from the U.S. and Japan, fuelling worries of a broader deceleration. On Friday, U.S. payroll data showed slower growth, reinforcing the view that the labour market is softening, which sent stocks lower. By Monday, Chinese, Japanese, and Hong Kong equities had also declined. In the commodities market, iron ore prices plummeted to a 22-month low, falling below $90 per ton due to signs of weakening demand. Despite these concerns, U.S. and European equity futures show slight gains.
- Investors have new developments to assess regarding U.S. political risks. Over the weekend, Donald Trump pledged to impose significant penalties on countries that move away from the U.S. dollar, expanding his tariff-driven economic platform. At a rally in Wisconsin, the Republican presidential candidate stated, “You leave the dollar and you’re not doing business with the United States because we are going to put a 100% tariff on your goods.” This adds a new dimension to his stance on trade policy. Trump is set to debate Vice President Kamala Harris on Tuesday, with polls indicating a tightly contested presidential race. Meanwhile, senior advisors to President Joe Biden are reportedly working on a proposal to establish a sovereign wealth fund aimed at investing in national security priorities, including technology, energy, and critical supply chain infrastructure, according to sources familiar with the discussions.
Market Pulse
Coming Up
- UK Average Earnings Index + Bonus, Tuesday 10th September 2024 at 7:00am
- UK GDP Wednesday 11th September 2024 at 7:00am
- US CPI Data, Wednesday 11th September 2024 at 1:30pm
- ECB Interest Rate Decision, Thursday 12th September 2024 at 1:15pm
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.Open document settingsOpen publish panel
