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Markets in a minute 28th August 2023

EVERYTHING IS AUTUMN

Last week, equity markets were supported by weaker PMI data, which suggested that further monetary tightening was less likely.

This week, focus is likely to be on economic data, including August Eurozone consumer prices on Wednesday and US employment data on Friday, as barometers for future monetary policy paths.

Last week, the S&P 500 rose by 0.8% (MTD -3.9%, YTD 16.0%), while the Euro Stoxx 50 was up by 0.6% (MTD -5.2%, YTD 15.0%). Equity markets were supported by weaker PMIs, making further monetary tightening less likely.

US PMI indices fell, with the manufacturing index at 47 and that of services at 51.0. A PMI above (below) 50 suggests output expansion (contraction). The composite PMI for the Eurozone fell to 47, the lowest in 33 months, while German business confidence fell to the lowest in 10 months. Sentiment was thus indicative of slowing activity in the single currency area.

Fed Chair Powell's speech at Jackson Hole was somewhat hawkish, implying that the central bank remains focused on getting inflation down, stating: “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down”.

Rate markets priced in a slightly higher chance of further rate hikes from the Fed amid hawkish comments by Fed speakers.

This week, focus is likely to be on economic data, including August Eurozone consumer prices on Wednesday and US employment data on Friday, as barometers for future monetary policy paths.

Tues 29th

US - Job openings and labour turnover survey (JOLTS), Home price indices

Weds 30th

US - ADP employment, Advance economic indicators

Eurozone - Consumer confidence

Thurs 31st

US - Initial jobless claims

Eurozone - Consumer price inflation

Fri 1st

US - Employment data, ISM manufacturing

This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.

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