Please see today’s Daily Investment Bulletin from Brooks Macdonald which provides a brief analysis of the key factors currently affecting global markets:
What has happened
The US equity market managed a small gain yesterday, setting another all-time high as Europe played catch up, recording a larger gain. The smaller cap US equity market outperformed the Magnificent Seven yesterday helping to close some of the considerable year to date performance gap between the two. With the Federal Reserve in communication blackout, there was relative calm within the US Treasury market with 10-year US Treasury yields stable around 4.1%.
Bank of Japan
Overnight the Bank of Japan, the first major central bank to have its meeting ahead of a packed fortnight, kept its monetary policy unchanged. The bank revised its core inflation forecast, expecting inflation to be lower in the upcoming fiscal year. Maintaining interest rates, and monetary policy more broadly, at ultra-accommodative levels meant that 10-year Japanese government bond yields fell slightly.
Chinese assets
Hong Kong listed Chinese equities received a boost this morning after reports circulated that Chinese authorities were considering a 2 trillion yuan stimulus measure. The package is designed to provide momentum within the stock market which has had a very tough 2024 so far. The news helped Hong Kong equities more than mainland China itself which has seen more muted gains. The market has largely shrugged off previous attempts at stimulus, fearing that the regulatory backdrop still remains hawkish towards industries targeted in 2021 and 2022 such as real estate and educational technology.
What does Brooks Macdonald think
Looking ahead to today, the ECB’s Bank Lending Survey will be released for Q4 2023. The report will help investors understand the appetite for debt in the Euro Area as well as the availability of debt supply. The Q3 report suggested that banks expected a far more buoyant Q4, investors will be looking closely to see whether this has materialised.
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Andrew Lloyd DipPFS
23/01/2024