Market Monitor – 26 May 2023
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Market Monitor – 26 May 2023

Optimism about the possibility of a deal to raise the United States government debt ceiling has fizzled out, leading to renewed losses on global stock markets in recent days

Despite the positive noises made last week by both President Joe Biden and his Republican counterpart, House of Representatives speaker Kevin McCarthy, the two sides have remained unable to reach the agreement necessary for the US to avoid a potentially calamitous default. According to some estimates this could arrive as early as 1 June. Sentiment was not helped by the latest data from Europe which suggests that rising interest rates have started to dampen business activity in some of the eurozone’s largest economies.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2% down for the week so far, with the S&P 500 falling 1%. Lack of progress on debt ceiling talks led credit ratings agencies to warn of a potential downgrade for the US government, although investors were encouraged by more hopeful comments from negotiators late on Thursday. Losses were also offset to some degree by strong trading results from a major US semiconductor manufacturer on Wednesday.

UK

In the UK, the FTSE 100 closed on Thursday 2.4% down for the week so far. Share prices in London were hit hard by nervousness around the US debt ceiling as well as the latest inflation data in Britain. While the headline Consumer Price Index figure for April showed a drop in March, the underlying cost of essentials such as food continues to surge. Speculation has grown that the Bank of England may need to raise interest rates as high as 5% in the coming months as a result. Energy companies were buoyed on Wednesday by reports that OPEC may be considering a cut in oil production, which would drive crude oil prices higher. However, Russian officials responded by saying they would block such a move.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 3% for the week, while France’s CAC 40 lost 3.5%. Recent data showed that business growth across the eurozone has slowed more rapidly than expected this month, with expansion in France down to its slowest pace in four months. Figures for the first quarter of 2023 indicated that Germany had entered recession following the downturn in the final three months of last year.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 3.6% largely due to the intensification of the dispute between China and the US over access to technology. At the start of the week, Chinese authorities announced a ban on supplies of microchips from a major American manufacturer on national security grounds, prompting politicians in the US to call for retaliation from the Biden administration. Japan’s Nikkei 225 index of leading shares, meanwhile, ended Thursday level for the week so far. Tokyo-listed tech and manufacturing firms are set to benefit from an easing in semiconductor supply chain issues, while the Japanese government raised its outlook for growth in 2023.

19 May
25 May
Change (%)
FTSE 100
7756.9
7570.9
-2.4
FTSE 250
19289.1
18840.8
-2.3
S&P 500
4192.0
4151.3
-1.0
Dow Jones
33426.6
32764.7
-2.0
DAX
16275.4
15793.8
-3.0
CAC 40
7492.0
7229.3
-3.5
ACWI
656.4
646.0
-1.6
Hong Kong Hang Seng
19450.6
18746.9
-3.6
Nikkei 225
30808.4
30801.1
0.0

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 25 May 2023.

26 May 2023
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Market Monitor – 26 May 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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