Week ending 13 September 2024
Highlights
Equity markets rebounded this week across the globe: Nvidia was a key player with US Technology leading the way.
Weekly Market Commentary
Week ending 13 September
The European Central Bank cut rates again: a different story in Japan as hikes could be on the horizon for them.
Fed to decide interest rate cuts next week: how much will they reduce by?
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Market Review
Global equities rebounded this week with the US technology sector leading the way. Nvidia was a large contributor after the CEO, Jensen Huang, mentioned the substantial demand for semiconductor chips during his speech at Goldman Sachs. Microsoft also noted the heightened demand for Artificial Intelligence (AI) infrastructure. This week also saw the first US presidential debate between Trump and Harris.
On Wednesday, the US Consumer Price Inflation (CPI) print for August was released. The data came in slightly above expectations with core CPI (excluding food and energy) rising 0.3% month-on month (m/m) which was above the market’s prediction of a 0.2% rise. In addition to US CPI, m/m US
Producer Price Inflation (PPI) also exceeded expectations. This has led the market to expect a 0.25% interest rate cut at the next Federal Reserve meeting.
On Thursday the European Central Bank (ECB) decided to cut interest rates by 0.25% for the second time this year. In Asia, the Bank of Japan is on a different policy trajectory with their central bank suggesting more interest rate hikes are to come. These comments increased the value of the Japanese Yen over the week.
Outlook
The Fed has given stronger indications that easing could begin soon and markets now assign a 100% probability of a rate cut this month, the focus is now on the size of this reduction. Investors and central banks alike continue to focus on key data points including inflation, unemployment and growth, that can provide insight into the relative health of economies.
Chart of the Week
Will it be a 0.25% or 0.50% rate cut at the upcoming Fed meeting? The chart shows the market probability of a 0.25% or 0.50% interest rate cut at the next Fed meeting on the 18 September
2024. Throughout August and September this year, the market has predicted that the Federal Reserve will start its interest rate cutting cycle at the September 2024 meeting. This view was echoed the
Fed Chair, Jerome Powell, in August. At the start of August, the probability of a 0.50% interest rate cut reached as high as 85%. However, the market’s expectations have shifted
towards a 0.25% interest rate cut. This prediction was reinforced by the recent US CPI data release.the start of 2023.
What This Means for You
Yet again, this week shows varied messaging across the globe. This is continued evidence that maintaining a well-diversified, long-term thinking to your investment approach rather than reacting to market swings is key. By staying committed to carefully considered plans, investors can navigate through periods of volatility and uncertainty.
Has provided the commentary within this document.
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SAMANTHA HAGON