Market Monitor – 7 July 2023
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Market Monitor – 7 July 2023

Global stock markets have endured a turbulent week with fears of further sharp increases in interest rates sparking sell-offs on indexes in Europe and the United States

Latest employment figures published in the US on Thursday suggested that the monetary tightening programme implemented by the Federal Reserve had done little to cool the American jobs market. As a result, officials are again expected to raise interest rates at the end of the month as they continue their battle against inflationary pressures. European markets fell particularly steeply on interest rate rise fears and the latest signs that China’s post-Covid economic recovery was faltering.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.4% down for the week so far, with the S&P 500 shedding 0.9%. Share prices in the US were especially volatile with mixed signals from the recent economic data, while the country’s manufacturing sector was reported to have contracted for a second consecutive month in June. Statistics issued later in the week showed that the US economy added almost 500,000 jobs in June, double most economists’ estimates. Investors believe the Fed now has no choice but to increase rates again at its July meeting to drive inflation down towards its 2% target.

UK

In the UK, the FTSE 100 closed on Thursday 3.3% down for the week so far, falling to its lowest level since the financial sector crisis in March. Persistent high inflation in Britain has driven interest rate expectations sharply higher in recent weeks, with the consensus view suggesting the base rate – which presently stands at 5% – will hit 6.5% by the end of the year. Further rises in government bond yields in recent days have put renewed pressure on mortgage rates. This is yet more bad news for a housebuilding sector that is already contracting at its fastest pace since the global financial crisis of 2008-09.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 3.8% for the week, while France’s CAC 40 lost 4.2%. Expectations of further interest rate rises from the European Central Bank weighed heavily on real estate companies, while worries about slowing growth and weaker consumer spending hit travel and leisure stocks. The latest signs of a highly uneven recovery in China also impacted the eurozone’s biggest exporters to the Far East.

Asia

In Asia, the Hang Seng index in Hong Kong lost 2% as data published this week showed that growth in China’s services sector – the standout performer since Covid-19 restrictions were lifted in late 2022 – had started to decelerate. Tensions between the US and China also harmed sentiment after the Beijing government imposed a ban on the export of certain raw materials to American manufacturers. Shares in China had started the week brightly on hopes that policymakers would increase the scale of stimulus measures introduced at the end of June. Japan’s Nikkei 225 index of leading companies declined 1.3%, with falls among the country’s technology firms occurring after major shareholders in a top-performing semiconductor firm announced the sale of their stakes.

30 June
6 July
Change (%)
FTSE 100
7531.5
7280.5
-3.3
FTSE 250
18416.8
17916.5
-2.7
S&P 500
4450.4
4411.6
-0.9
Dow Jones
34407.6
33922.3
-1.4
DAX
16147.9
15528.5
-3.8
CAC 40
7400.1
7082.3
-4.3
ACWI
682.8
673.8
-1.3
Hong Kong Hang Seng
18916.4
18533.1
-2.0
Nikkei 225
33189.0
32773.0
-1.3

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 6 July 2023.

7 July 2023
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Market Monitor – 7 July 2023

Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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