Please see below article received from Brooks Macdonald yesterday afternoon, which provides a global market update with reference to the Israel/Hamas conflict.
- The Israel/Hamas conflict leads to significant loss of life and financial markets raise the probability of a reduction in oil supply
- US earnings season steps into gear this week with major financials reporting alongside some important technology names
- UK inflation data and employment data will be in focus on Tuesday and Wednesday as markets weigh UK recession risks
Last week saw equity and bond markets dominated by the events in the Middle East as well as a set of more dovish US Federal Reserve speakers. Friday saw rising concerns of a ground offensive in Gaza which saw US Treasury yields fall as investors sought safety in the US dollar and sovereign debt. The fact that this ground offensive has yet to begin has helped a cautious optimism to creep into early equity trading this week.
This week sees the US earnings season begin in earnest with a heavy focus on financials alongside a few technology heavyweights. Highlights include Tesla and Netflix which both report on Wednesday and are likely to have an outsized impact on market sentiment given their size as well as the importance of the tech focused magnificent seven to index returns this year. In terms of economic data, US retail sales will be closely watched after Friday’s University of Michigan consumer confidence surprised significantly to the downside. Also of importance will be the weekly jobless claims which have been holding up very strongly. This week is the week used for the US nonfarm payroll surveys so the jobless claims will give an insight into the US employment report in a few weeks’ time.
The UK sees the release of inflation data as well as labour market data this week. Tuesday contains the UK Claimant Count data which looks at unemployment using the % of individuals claiming unemployment benefit. This reading is lower than the wider unemployment measures as some eligible individuals do not claim unemployment benefit and some unemployed individuals are not eligible. UK unemployment is now 0.8% above the lows for the cycle and UK unemployment has increased faster than any other country in the developed world so one to watch. UK inflation meanwhile is expected to stay sticky with a 0.4% month-on-month gain at the headline level, leaving the year-on-year gain at 6.5% versus 6.7% the month prior.
Outside of the US and Europe, markets will also be paying close attention to the Japanese Consumer Price Index (CPI) release on Friday. The Bank of Japan is beginning to react to a higher inflation backdrop after struggling against deflation for decades. The 31 October central bank meeting could see the bank’s policy of yield curve control, effectively quantitative easing in the sovereign bond market, finally end. Friday’s CPI release will be a key input into that decision.
Please check in again with us soon for further relevant content and news.
Chloe
17/10/2023