Market Monitor – 22 September 2023
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Market Monitor – 22 September 2023

Fears that interest rates will remain at higher levels for longer than previously expected have sparked losses on global stock markets

While central banks in the United States and the UK temporarily paused their programmes of monetary policy tightening this week, investors are worried that the string of rate cuts predicted for 2024 are less likely to materialise.

The Federal Reserve and the Bank of England cited the inflationary pressures caused by rising oil prices as justification for maintaining rates at their present levels for the foreseeable future, and possibly even increasing them before the end of the year. There was some positive news in the shape of an upgraded forecast for global growth in 2023 from the OECD, although concerns about the fragility of China’s real estate sector again weighed on sentiment.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.6% down for the week so far, with the S&P 500 slumping 2.7%. Technology stocks were particularly weak in the US due to fears of permanently higher interest rates, as well as warnings of a slowdown in the global semiconductor market. Industrial action at several of America’s biggest auto manufacturers also held stocks back, while there were signs that consumer spending was starting to weaken.

UK

In the UK, the FTSE 100 closed on Thursday 0.4% down for the week so far, with share prices in London outperforming their counterparts in Europe, America and Asia given continued rises in the price of oil, which benefited the FTSE’s major energy firms. Crude values approached $100 a barrel earlier in the week – their highest level since last November – before slipping back on concerns that high interest rates could stifle global growth. An unexpected fall in UK inflation in August was reported on Wednesday, allowing the Bank of England to keep rates on hold for the first time in over a year. However, officials warned that talk of a cut was highly premature.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 2% for the week, while France’s CAC 40 lost 2.2%. Revised data revealed that eurozone inflation was reported to have fallen more quickly than anticipated in August, easing the pressure on the European Central Bank to raise interest rates again in the short term. However, analysts suggested the eurozone economy would fall into recession in the second half of this year, while the OECD’s forecasts said Germany would have the weakest economy in the G7 in 2023.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 2.9%, with concerns about US interest rates on Thursday adding to another gloomy week in China. Reports of a police investigation into alleged fraud at a major real estate company sent share prices tumbling on Monday, while investors remained unconvinced that a smattering of upbeat output data heralds a genuine turnaround for the beleaguered Chinese economy. Japan’s Nikkei 225 index of leading shares also declined 2.9%, with weakness in technology stocks compounded by fears that the Bank of Japan may be on the verge of embarking on its own programme of monetary tightening.

15 September
21 September
Change (%)
FTSE 100
7711.4
7678.6
-0.4
FTSE 250
18789.8
18638.6
-0.8
S&P 500
4450.3
4330.0
-2.7
Dow Jones
34618.2
34070.4
-1.6
DAX
15893.5
15571.9
-2.0
CAC 40
7378.8
7213.9
-2.2
ACWI
681.3
663.8
-2.6
Hong Kong Hang Seng
18182.9
17655.4
-2.9
Nikkei 225
33533.1
32571.0
-2.9

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 21 September 2023.

22 September 2023
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Market Monitor – 22 September 2023

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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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