Market Monitor – 6 October 2023
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Market Monitor – 6 October 2023

A new month has done little to brighten investors’ mood, with fears of a prolonged period of high interest rates continuing to weigh on sentiment in global markets

Sharp rises in yields on government bonds on Tuesday and Wednesday reflect the fact that investors increasingly expect tight monetary policy in the United States and Europe to continue well into 2024. With further signs of resilience in the American economy, the dollar reached new highs against a range of currencies mid-week – a development that will only increase inflationary pressures outside the US. The World Trade Organisation cut its forecasts for global growth on Thursday, citing a likely slowdown in international manufacturing. Slowdown fears also prompted a fall in the price of oil following its recent surge.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.2% down for the week so far, with the S&P 500 losing 0.7%. The week began on a positive note after lawmakers in Congress reached an eleventh-hour deal to avert a government shutdown. However, the relief was short-lived after Republican rebels forced the exit of House speaker Kevin McCarthy on Tuesday – a move that is expected to increase the likelihood of another shutdown showdown before the end of the year. Economic data indicated a small increase in manufacturing output in September as well as a larger-than-forecast rise in job vacancies in August, putting further pressure on the Federal Reserve to raise interest rates yet again.

UK

In the UK, the FTSE 100 closed on Thursday 2.1% down for the week so far, with receding oil and commodity prices driving down the price of major energy and mining stocks. Economic data in Britain was again mixed: there was positive news in the shape of a month-on-month fall in grocery prices, while updated figures showed that September’s service sector contraction was less severe than originally estimated. House prices continued to fall, however, while last month UK construction firms recorded their steepest fall in output since the early weeks of the Covid-19 pandemic in 2020. The mood in the sector was not helped by the government’s controversial decision to scrap the northern section of the High Speed 2 rail project.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 2.1% for the week, while France’s CAC 40 lost 1.9%. News that eurozone unemployment had reached a record low could raise the chances of the European Central Bank increasing interest rates further, and the cost of government debt in Germany rose to its highest level since 2011. However, the ECB will need to take into account signs of slowing European growth at its next monetary policy meeting: private sector demand in the eurozone was reported to have fallen at its fastest rate in three years in September, while German export volumes also declined.

Asia

In Asia, the Hang Seng index in Hong Kong shed 3.3% as Chinese economic data continued to underwhelm. Weak factory output figures for September were the latest sign of a spluttering post-pandemic recovery. Japan’s Nikkei 225 index of leading shares fell 2.5% on fears of higher interest rates in the US. Meanwhile, efforts by the Bank of Japan to support the yen in the face of the soaring dollar on Tuesday appeared to be largely ineffective.

29 September
5 October
Change (%)
FTSE 100
7608.1
7451.5
-2.1
FTSE 250
18279.4
17600.0
-3.7
S&P 500
4288.1
4258.2
-0.7
Dow Jones
33507.5
33119.6
-1.2
DAX
15386.6
15070.2
-2.1
CAC 40
7135.1
6998.3
-1.9
ACWI
656.8
648.0
-1.3
Hong Kong Hang Seng
17809.7
17213.9
-3.3
Nikkei 225
31857.6
31075.4
-2.5

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 5 October 2023.

6 October 2023
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Market Monitor – 6 October 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.

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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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