Market Recap

Indices were mostly flat for the week, although the ACWI ESG Screened ESG strategy led the way with a 0.12% gain.

(1 week performance from 08/04/24 to 12/04/24)

EV Charging Solutions Provider EnviroSpark Raises $50 Million

Electric vehicle (EV) solutions startup EnviroSpark Energy Solutions announced a $50 million investment from infrastructure-focused investor Basalt Infrastructure Partners, with proceeds to be used to expand its charging network across the U.S.

Founded in 2014, Atlanta-based EnviroSpark provides solutions aimed at addressing the pain points of property owners and drivers by enhancing EV accessibility, with services ranging from consultation & site design, engineering and permitting to installation, operation and maintenance and driver & app support. The company currently owns and operates more than 8,200 installations of charging plugs across North America.

Sustainable Aviation Fuel Deal to Eliminate 100,000 Tons of CO2

Boston Consulting Group (BCG) and low carbon solutions provider World Energy announced today a new 5-year agreement for the purchase by BCG of sustainable aviation fuel certificates (SAFc) as part of the company’s efforts to achieve its net zero climate goals.

The agreement marks BCG’s largest SAFc purchase to date, and is expected to deliver an emissions reduction of 100,000 metric tons of CO2 over the next five years.

Teva Commits to Net Zero and 100% Renewable Energy

Teva Pharmaceutical have announced a series of new sustainability goals, including targets to achieve net zero emissions across the company’s operations and value chain by 2045 and to reach 100% renewable electricity across all Teva sites by 2035.

The new goals were announced alongside the release of Teva’s 2023 Healthy Future Report, outlining the company’s initiatives under its “Healthy Futures” sustainability strategy.

Electricity Maps Raises $5 Million to Scale Electricity Optimisation Solution

Climate tech startup Electricity Maps has raised €5 million (USD$5.4 million), with proceeds aimed at supporting the expansion of its solutions to map global electricity grids and support data-driven decarbonisation of the energy sector.

Founded in 2016, Copenhagen-based Electricity Maps provides companies with data quantifying the carbon intensity and origin of electricity. It also helps users understand and reduce the carbon footprint of their electricity usage. The company’s solutions can be used to help companies disclose the carbon footprint of their electricity usage on a granular level, and to plan energy usage for times when more green electricity is available on the grid.

Download

Sources.
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap Data sourced from FE FundInfo & Koyfin (quoted in Pounds Sterling).
EV Charging Solutions Provider EnviroSpark Raises $50 Million, by ESG today, 07/05/24
BCG Signs Sustainable Aviation Fuel Deal to Eliminate 100,000 Tons of CO2 Emissions by ESG today, 07/05/24
Teva Commits to Net Zero Across Value Chain, 100% Renewable Energy by ESG Today 07/05/24
Climate Tech Startup Electricity Maps Raises $5 Million to Scale Electricity Optimization Solutions, by ESG today 07/05/24

Risk Warning: These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information: This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post ESG in 5: 8 May 2024 appeared first on Clever.

Market Recap.

Equities staged a rally at the latter part of the week, with the FTSE 100 ETF (+0.89%), Nasdaq 100 ETF (0.85%) leading, whilst the Dow Jones ETF (+0.76%) ran close in third place. The S&P 500 ETF (+0.26%) was muted in comparison.

News.

The euro zone economy grew by more than expected in the first quarter of 2024, buoyed by a return to growth for Germany and strong expansion in Spain, preliminary data from the European statistics agency Eurostat showed. Inflation was 2.40% in April, the same as in March and matching expectations for a steady reading in a Reuters poll of analysts.

Gross domestic product increased by 0.30% quarter-on-quarter for a 0.50% year-on-year rise, compared with market expectations that both would expand by just 0.20%.

Geopolitics.

Polish Prime Minister Donald Tusk has said that in order for Europe to avoid conflicts and be safe it must increase its defence capabilities, and he repeated his call for the construction of a common European air defence system.

In the face of the conflict in Ukraine, Poland is strengthening its defence capabilities, allocating over 4% of its Gross Domestic Product. Tusk said EU countries should take joint action to increase spending on defence by at least 100 billion euros ($107 billion).

Inflation.

Euro zone inflation held steady as expected in April but a crucial indicator on underlying price pressures slowed, solidifying an already strong case for the European Central Bank to cut interest rates in June. Inflation was 2.40% in April, the same as in March and matching market expectations.

The ECB all but promised a rate cut on June 6, provided there is no nasty surprise in wage or price developments, and Tuesday’s data remain consistent with the path the bank saw in its last round of projections in March.

Central Banks.

The U.S. Federal Reserve held interest rates steady and signaled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings that could make those rate cuts a while in coming.

Indeed, Fed Chair Jerome Powell said that after starting 2024 with three months of faster-than-expected price increases, it “will take longer than previously expected” for policymakers to become comfortable that inflation will resume the decline towards 2% that had cheered them through much of last year.

ESG.

Microsoft has signed its largest ever carbon removal deal with Swedish energy company Stockholm Exergi. The 10-year offtake agreement provides Microsoft with more than 3.3 million tonnes of carbon removal certificates from its planned bio-energy with carbon capture and storage (BECCS) at Värtan, Stockholm.

Commodities.

Natural Gas gained 10.25% for the week, trading around a four-month high, supported by rising demand forecasts and a 9.00% decrease in production in 2024. Crude oil declined by 3.00% for the week as ample supply outweighed concerns around geopolitical risk and ongoing conflict in the Middle East. Elsewhere, Wheat and Soybeans both gained around 7.50% for the week although for Wheat, drought conditions in the US have eased which gives hope to additional supply, whilst in Brazil, 34% of the Soybean crop has been affected by flooding.

Week Ahead.

Of the major releases this week, the UK announces its interest rate decision on Thursday with markets expecting rates to stay unchanged at 5.25%. And on Friday, the UK publishes its GDP growth figures with Quarter-on-Quarter growth expected to be 0.40% against -0.30% prior.

Download

Sources:
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo & Koyfin. ETFs quoted: iShares Core FTSE 100 UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Nasdaq 100 UCITS ETF (quoted in Pounds Sterling).
News – Euro zone grows more than expected in Q1 after recession, By Philip Blenkinsop, Reuters, 30/04/24
Inflation – Euro zone inflation steady in April, reinforcing ECB rate cut case, By Balazs Koranyi, Reuters, 30/04/24
Central Banks – Fed leaves rates unchanged, flags ‘lack of further progress’ on inflation, By Howard Schneider and Ann Saphir, Reuters, 02/05/2024
ESG – Microsoft Signs Largest-Ever 3.3 Million Tonne Carbon Removal Deal with Stockholm Exergi, by Mark Segal, ESG Today, 06/05/24
Geopolitics – Europe must increase defence capabilities to be safe, says Poland’s Tusk, By Paweł Florkiewicz and Anna Wlodarczak-Semczuk, Reuters, 07/04/24
Commodities – Data sourced from Koyfin and Investing.com
Week ahead – Data sourced from Investing.com

Risk Warning:

These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information:

This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post The Market Review: 7th May 2024 appeared first on Clever.

Market Recap.

Markets receded for the week with the Dow Jones Industrial Average ETF (-0.26%) faring best as inflation and related measures, continued to stall, showing that interest rates may not be cut as soon as the market priced in.

The commodity-heavy FTSE 100 ETF (-0.77%) also held up reasonably well, whilst both major US indices were hit harder as the S&P 500 ETF (-2.70%) and the Nasdaq 100 ETF (-4.52%) both struggled for the week.

News.

The US economy is forecast to grow by 2.70% in 2024, the highest of the advanced economies, with Spain the second nearest at 1.90%. The world economy is set to continue growing at 3.20% during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies will be offset by a modest slowdown in emerging market and developing economies from 4.30% in 2023 to 4.20% in both 2024 and 2025.

Geopolitics.

Explosions echoed over an Iranian city on Friday in what sources said was an Israeli attack, but Tehran played down the incident and indicated it had no plans for retaliation – a response that appeared gauged towards averting region-wide war. Iran’s foreign minister said the drones, which the sources said Israel launched against the city of Isfahan, were “mini-drones” and that they had caused no damage or casualties. The limited scale of the attack and Iran’s muted response appeared to signal a successful effort by diplomats who have been working to avert all-out war since a recent Iranian drone and missile attack on Israel.

Inflation.

Britain’s inflation rate slowed by less than expected in March, according to official figures, adding to signs that a first interest rate cut by the Bank of England could be further off than previously thought.

British consumer prices rose by an annual 3.20%, down from a 3.40% increase in February and its lowest in two and a half years, the Office for National Statistics said.

Markets had forecast a fall in inflation to 3.10%. Subsequently, investors reduced their bets on BoE rate cuts and sterling rose.

Central Banks.

European Central Bank President Christine Lagarde has said the central bank remains on course to cut interest rates in the near term, subject to any major shocks. Lagarde said the ECB would monitor oil prices “very closely” amid elevated fears of a spillover conflict in the Middle East. However, since Iran’s unprecedented air attack on Israel, she said the oil price reaction had been “relatively moderate.”

Her comments come shortly after the central bank gave its clearest indication to date that it could start cutting interest rates during its June meeting.

ESG.

Apple have announced that 95% of the company’s direct manufacturing spend have now committed to use 100% renewable energy for Apple production by 2030. Emissions from product manufacturing represents nearly two-thirds of Apple’s carbon footprint, with electricity use as the single largest contributor.

Commodities.

In metals, Steel stormed ahead, adding 4.48%, followed by Aluminium which gained 4.27%. Both Crude oil contracts were down by over 3.00% whilst Heating oil declined by 4.11% as the latest EIA report revealed higher-than-expected crude oil stockpiles, coupled with reduced expectations of Fed interest rate cuts and concerns over China’s economic struggles, as the world’s top importer, further dampened sentiment.

Week Ahead.

Of the major economic releases this week, final manufacturing and Global Services PMI numbers will be published, with both still expecting growth. And on Thursday, the US announces Quarter-on-Quarter GDP, with the forecast for 2.50% growth compared to 3.40% prior.

Download

Sources:
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo & Koyfin. ETFs quoted: iShares Core FTSE 100 UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Nasdaq 100 UCITS ETF (quoted in Pounds Sterling).
News – Global recovery is steady but slow and differs by region, By The IMF, 22/04/24
Inflation – UK inflation slows its fall, pushing back rate cut bets, By Suban Abdulla and William Schomberg, Reuters, 17/04/24
Central Banks – Lagarde says ECB will cut rates soon, barring any major surprises; notes ‘extremely attentive’ to oil, by Sam Meredith, CNBC, 16/04/2024
ESG – 95% of Apple’s Supply Chain Commits to 100% Renewable Energy Use by 2030, by Mark Segal, ESG Today, 22/04/24
Geopolitics – Tehran plays down reported Israeli attacks, signals no retaliation, By Parisa Hafezi and James Mackenzie, Reuters, 19/04/24
Commodities – Data sourced from Koyfin and Investing.com
Week ahead – Data sourced from Investing.com

Risk Warning:

These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information:

This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post The Market Review: 22nd April 2024 appeared first on Clever.

Market Recap

Indices were mostly flat for the week, although the ACWI ESG Screened ESG strategy led the way with a 0.12% gain.

(1 week performance from 08/04/24 to 12/04/24)

SBTi to Allow Increased Role for Carbon Credits in Net Zero Targets

The Science Based Targets initiative (SBTi), has announced plans to extend the use of environmental attribute certificates, such as emissions reduction credits, to tackle Scope 3 value chain emissions, in its standard for corporate net zero target setting. While Scope 3 emissions, which occur in value chain areas outside of companies’ direct control, are typically the most difficult to measure and manage, they also make up the vast majority of most companies’ emissions impact, often accounting for more than 90% of emissions overall.

New $5 Billion Steel Mill to Eliminate 7% of Sweden’s CO2 Emissions

Sweden-based global steel company SSAB announced a decision to build a fossil-free mini-mill in Luleå, Sweden, capable of producing 2.5 million tonnes of carbon emission-free steel annually.

Total investment in the new mill is estimated at €4.5 billion (USD$4.9 billion), and the project is expected to reduce Sweden’s CO2 emissions by 7%.

Steelmaking is one of the biggest emitters of CO2 globally, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels.

Zero-Emission Truck Startup Windrose Raises $100 Million

Electric heavy-duty truck developer Windrose Technology announced that it has raised $100 million in its Series B funding round.

Founded in 2022, Windrose Technology develops zero-emissions and intelligent long-haul trucks, targeting markets including China, the U.S., and Europe. The company’s first electric long-haul truck has a range of 670 km under full load of 49 tons, and its platform uses an 800V high-voltage fast-charging platform and can replenish 400km of range in under 36 minutes.

The financing comes as governments globally move to decarbonize road transport, with new regulations recently launched in Europe mandating a 45% emissions reduction from heavy-duty vehicles by 2030 and 90% by 2040

EdgeConneX Secures $1.9 Billion in Financing Tied to Sustainability Goals

Global data centre provider EdgeConneX announced that it has secured $1.9 billion in sustainability-linked financing, with proceeds aimed at supporting its digital infrastructure expansion in EMEA, and with interest rates tied to the achievement of the company’s environmental sustainability goals. The new transaction builds on an initial $2.9 sustainability-linked financing announced by the company in 2022 and transitions it from stand-alone project-based funding to a more robust structured corporate debt package.

Download

Sources.
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap Data sourced from FE FundInfo & Koyfin (quoted in Pounds Sterling).
SBTi to Allow Increased Role for Carbon Credits in Net Zero Targets, by ESG Today, 10/04/24
SSAB’s New $5 Billion in Fossil-Free Steel Mill to Eliminate 7% of Sweden’s CO2 Emissions, by ESG today, 10/04/24
Zero-Emission Truck Startup Windrose Raises $100 Million by ESG today, 15/04/24
EdgeConneX Secures $1.9 Billion in Financing Tied to Sustainability Goals by ESG Today 15/04/24

Risk Warning: These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information: This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post ESG in 5: 16 April 2024 appeared first on Clever.

Market Recap.

In a mixed week for markets, the Nasdaq 100 ETF (1.51%), FTSE 100 ETF (0.81%) and S&P 500 ETF (0.63%) all made a gain, whilst only the Dow Jones Industrial Average ETF (-0.45%) struggled to keep pace.

The major sectors in the US pulled back for the week, with Technology faring best (-0.50%) and Financials faring worst (-3.63%) as uncertainty around the timing of interest rate cuts persisted.

News.

Britain’s economy has taken a step closer to exiting recession as official figures showed growth continued in February despite a washout month for construction and retail after one of the wettest starts to a year on record.

The Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.1% in February, matching City economists’ forecasts and extending a recovery after growth in January was revised up from 0.20% to 0.30%.

Geopolitics.

President Joe Biden warned Prime Minister Benjamin Netanyahu the U.S. will not take part in a counter-offensive against Iran, an option Netanyahu’s war cabinet favours after a mass drone and missile attack on Israeli territory, according to officials.

The threat of open warfare erupting between the arch Middle East foes and dragging in the United States put the region on edge, triggering calls for restraint from global powers and Arab nations.

Inflation.

U.S. consumer prices increased more than expected in March as Americans continued to pay more for gasoline and rental housing, leading financial markets to anticipate that the Federal Reserve would delay cutting interest rates until September. Core CPI came in at 3.80%, above the 3.70% forecast, whilst Year on Year CPI was 3.50%, above expectations of 3.40%.

The third straight month of strong consumer price readings reported by the Labor Department on Wednesday also suggested that the pick-up in inflation in January and February could not be solely attributed to businesses raising prices at the start of the year as economists had argued.

Central Banks.

The European Central Bank kept interest rates at record highs last week but sent an even clearer signal that it may be preparing to cut them as euro zone inflation continues to fall. The central bank kept its deposit rate at 4.00%, where it has been since September as part of a 1.5-year effort to rein in prices.

But, with inflation now close to the ECB’s 2% target, bank lending at a standstill and the economy barely growing, the ECB dropped fresh hints about a possible cut at its next meeting.

ESG.

The European Council has formally adopted the revised Energy Performance of Buildings Directive (EPBD), with new rules aimed at reducing energy use and emissions from buildings across the EU, including targets for all new buildings to be zero emissions by 2030, and to phase out the use of fossil fuels in building heating systems by 2040.

Buildings are a key source of global greenhouse gas (GHG) emissions, and also one of the hardest to replace, given their long-term nature. According to the European Commission, buildings account for 40% of the energy consumed in the EU, and for 36% of energy related GHG emissions. 80% of household energy consumption is used for heating, cooling, and hot water.

Week Ahead.

Of the major economic releases, the UK publishes its inflation data on Wednesday with the market expecting Year-On-Year inflation to fall to 3.10% from 3.40% prior. The EU publishes its bi-monthly inflation figures with the market expecting inflation to fall to 2.40% from 2.60% prior. Finally, the US publishes its Initial Jobless Claims figures on Thursday, with claims forecast to be 214,000 ahead of 211,000 prior.

Download

Sources:
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap – Data sourced from FE FundInfo & Koyfin. ETFs quoted: iShares Core FTSE 100 UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Nasdaq 100 UCITS ETF (quoted in Pounds Sterling).
News – UK takes another step on path out of recession as GDP rises, By Richard Partington, Guardian, 12/04/24
Inflation – US consumer prices heat up in March; seen delaying Fed rate cut, By Lucia Mutikani, Reuters, 10/04/24
Central Banks – ECB holds rates at record highs, signals upcoming cut, by Reuters, 11/04/2024
ESG – EU Adopts Rules Requiring All New Buildings to Be Zero Emissions by 2030, by Mark Segal, ESG Today, 12/04/24
Geopolitics – US will not take part in any Israeli retaliatory action against Iran, By James Mackenzie, Parisa Hafezi and Jeff Mason, Reuters, 15/04/24
Commodities – Data sourced from Koyfin and Investing.com
Week ahead – Data sourced from Investing.com

Risk Warning:

These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information:

This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post The Market Review: 15th April 2024 appeared first on Clever.

Artificial intelligence (AI) is reshaping the finance industry, streamlining traditional banking processes and unlocking new insights from vast amounts of data. The application of AI in finance spans a broad range of functions including fraud detection, credit scoring, risk assessment, and even enhancing customer service through personalised interactions. This revolutionary approach not only modernises financial operations but also significantly improves the overall customer experience with faster, contactless interactions and stronger fraud protection.

As AI continues to evolve, it transforms how financial services are delivered across the banking, financial services, and insurance (BFSI) sectors. This transformation is characterised by AI’s capability to learn independently, organize, and interpret information for making accurate predictions, thereby playing a pivotal role in financial decision-making. Moving forward, the integration of artificial intelligence in finance is set to redefine the landscape of the industry, promising a new era of efficiency, security, and customer-centric services.

The Evolution of AI in Finance

The evolution of AI in finance has been marked by significant milestones and a broadening of applications, showcasing the transformative power of machine learning (ML) and artificial intelligence (AI) in this sector.

Early Milestones in AI Finance

Recent Advances in ML Applications

The progression from foundational systems in the 1980s to today’s sophisticated AI applications, such as algorithmic trading, banking chatbots, and robo-advisory services, illustrates the dynamic evolution of AI in finance. This journey reflects a shift from experimental applications to integral components of the financial landscape, underscoring the growing reliance on AI and ML to drive innovation, enhance efficiency, and foster a more personalized approach to financial services.

The Future of Finance with AI

As we look towards the future, the finance industry stands on the cusp of a transformative era powered by artificial intelligence (AI). The implications of this transformation are vast, touching upon regulatory frameworks, industry dynamics, employment, and technological advancements.

Regulatory Evolution and AI Frameworks:

• The future of financial regulations is intricately linked with the industry’s automation, necessitating a responsible AI framework to navigate these changes.
• Policymakers are urged to adapt and address both the benefits and threats of AI, ensuring that regulatory measures evolve in tandem with AI’s capabilities.

Industry Dynamics and Employment:

• AI’s impact on industry dynamics is profound, with passive fund managers gaining an edge over active ones due to advancements in data and technology.
• The role of AI in employment within finance is dual-faceted, potentially leading to job losses in some areas while creating new opportunities for those skilled in technology.
• Notably, human-facing services in finance, where data is scarce or rapidly changing, are likely to remain essential, underscoring the irreplaceable value of human intuition and interaction.

Technological Advancements:

• Financial institutions are expected to significantly increase their investment in AI by 2027, reflecting the sector’s commitment to harnessing AI for data analysis, pattern recognition, automation, and personalised recommendations.
• The introduction of platforms like HPE GreenLake for Financial Services exemplifies the industry’s move towards flexible, secure, and cost-efficient technology solutions, optimising operations and enhancing customer experiences.

Conclusion

Through the exploration of artificial intelligence (AI) in finance, it’s clear that its integration heralds a remarkable shift in the financial sector, making operations more efficient, secure, and tailored to individual needs. The journey from AI’s early milestones to its current applications, including fraud detection, credit scoring, and customer service enhancements, illustrates a significant evolution. This evolution not only showcases the dynamic capabilities of AI but also its role in supporting and improving decision-making processes within the finance industry. As such, the implications of AI’s deployment extend far beyond operational advancements, promising to reshape industry standards and customer expectations alike.

Looking forward, the continuous fusion of AI with finance is set to further disrupt traditional paradigms, emphasising the necessity for adaptive regulatory frameworks and the importance of ethical considerations. These advancements underscore the critical need for ongoing research, development, and ethical deployment of AI technologies to harness their full potential responsibly.

This journey not only opens up new avenues for innovation but also reinforces the indispensable role of AI in shaping the future landscape of financial services.

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FAQs

What does AI contribute to the finance sector?

Artificial Intelligence (AI) revolutionises the finance industry by enhancing data analysis, improving performance metrics, enabling accurate predictions and forecasts, facilitating real-time computations, elevating customer service, and optimising intelligent data retrieval.

How is AI shaping the modern era?

AI, through its machine learning algorithms and intelligent systems, is adept at processing extensive datasets to detect patterns and execute tasks with unmatched speed and accuracy. This technological advancement liberates human resources for more intricate and imaginative tasks, positioning AI as a pivotal tool for problem-solving and decision-making across a multitude of sectors.

In what ways will AI redefine human roles in finance?

AI technologies are set to transform the finance sector by undertaking complex, repetitive financial tasks more swiftly and efficiently than humans. This transformation will not only refine trading decisions through precise financial analyses and predictive modeling but also streamline various consumer finance processes through automation.

What is the significance of AI in promoting sustainable finance?

AI is increasingly recognised for its vital role in sustainable financial management, which in turn contributes significantly to business success. By identifying environmental and climate-related challenges, assessing their impact on operations, and devising appropriate solutions, AI is at the forefront of promoting sustainability within the financial domain.

References
https://www.labelvisor.com/introduction-to-ai-in-finance/
https://www.hpe.com/us/en/what-is/ai-in-finance.html
https://www.deloitte.com/ng/en/services/risk-advisory/services/how-artificial-intelligence-is-transforming-the-financial-services-industry.html
https://ubuntu.com/blog/machine-learning-in-finance-history-technologies-and-outlook
https://www.turing.ac.uk/sites/default/files/2019-04/artificial_intelligence_in_finance_-_turing_report_0.pdf
https://medium.com/district3/the-history-of-ai-in-finance-7a03fcb4a498
https://www.imf.org/en/Publications/fandd/issues/2023/12/AI-reverberations-across-finance-Kearns
https://www.techtarget.com/searchenterpriseai/feature/AI-in-banking-industry-brings-operational-improvements
https://towardsdatascience.com/the-growing-impact-of-ai-in-financial-services-six-examples-da386c0301b2
https://www.thomsonreuters.com/en-us/posts/corporates/ai-compliance-financial-services/
https://www.akkio.com/post/compliance-artificial-intelligence
https://www.economicsobservatory.com/how-will-artificial-intelligence-affect-financial-regulation
https://hbr.org/2023/08/what-the-finance-industry-tells-us-about-the-future-of-ai
https://www.datacamp.com/blog/ai-in-finance
https://www.emarketer.com/insights/ai-in-finance/
https://www.oracle.com/erp/ai-financials/what-is-ai-in-finance/
https://cloud.google.com/discover/finance-ai
https://www.ibm.com/topics/artificial-intelligence-finance
https://onlinedegrees.sandiego.edu/artificial-intelligence-finance/
https://www.linkedin.com/pulse/risks-challenges-ai-financial-sector-gayncapital
https://www.loeb.com/en/insights/publications/2024/02/a-look-ahead-opportunities-and-challenges-of-ai-in-the-banking-industry
https://www.turing.ac.uk/sites/default/files/2023-09/full_publication_pdf_0.pdf
https://www.linkedin.com/pulse/7-unique-challenges-using-ai-finance-sunil-tudu
https://hqsoftwarelab.com/blog/challenges-of-ai-in-fintech/
https://www.appen.com/blog/key-challenges-of-ai-in-financial-services
https://www.elibrary.imf.org/view/journals/087/2021/024/article-A001-en.xml
Risk Warnings
The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds. Our funds invest for the long-term and may not be appropriate for investors who plan to take money out within five years. The fund will be exposed to stock markets and market conditions can change rapidly. Prices can move irrationally and be affected unpredictably by diverse factors, including political and economic events.

The post The New Era of Finance: The Significant Role of AI appeared first on Clever.

This week’s chart highlights the amount of money subscribed to adult ISAs during the financial year. This year marks the 25th anniversary of the ISA’s launch. From 2021 to 2022, the market value of Adult ISA holdings stood at £741.6 billion. Cash ISAs account for 38% of the market value, so that’s £281 billion held in cash ISAs. As an investor, this is very disappointing.

The post Chart of the Week – In The Year 2525 appeared first on Clever.

– Solarig Soars into Sustainable Aviation Fuel Production

– Groundbreaking Carbon Capture Project in US

– Phillips 66 Transforms Refinery: Now Exclusively Producing Renewable Fuel

Market Recap

Markets were challenged for the week, with the unconstrained index jointly leading with the ESG Focus Index, although both produced a negative return of -0.94%.

(1 week performance from 01/04/24 to 05/04/24)

efinium £200m carbon capture plant set for North Wales

enfinium, a leading UK energy from waste operator, announces it is progressing in carbon capture and storage (CCS) technology at the Parc Adfer energy from waste facility, providing vital carbon removals and boosting the green economy.

The project could capture up to 235,000 tonnes of carbon dioxide (CO2) every year. As over half of the waste processed at the facility is organic, installing CCS would enable the plant to take more CO2 out of the atmosphere than it produces.

Solarig to Build $850 Million Sustainable Aviation Fuel Plant in Spain

Clean energy developer Solarig has announced that it will develop a new sustainable aviation fuel (SAF) plant in Spain, with a production capacity of 60,000 tonnes (approximately 75 million litres) of SAF per year. The company anticipates that it will invest €780 million (USD$847 million) in the new plant, located in in Parque Empresarial del Medio Ambiente (PEMA) located in the municipality of Garray.

Sustainable aviation fuel is seen as one of the key tools to help decarbonize the aviation industry, which currently accounts for 2-3% of global greenhouse gas (GHG) emissions.

U.S. Steel to Capture 50,000 Tons of Carbon per Year at Steel Plant

U.S. Steel and carbon capture technology provider CarbonFree announced a new agreement aimed at launching a new project to capture up to 50,000 metric tons of carbon dioxide per year at U. S. Steel’s integrated steel mill in Gary, Indiana.

According to CarbonFree, the project will be the first commercial-scale carbon capture utilisation plant at a steel plant in North America.

Founded in 2016, Texas-based CarbonFree develops technologies aimed at decarbonising of hard-to-abate industries and global supply chains.

Phillips 66 Converts Oil Refinery to Produce Only Renewable Fuel

Starbucks announced that it has now certified more than 6,000 of its locations globally as “Greener Stores,” meeting a series of environmental impact criteria and sustainability features, including energy and water savings and waste diversion.

In order to be certified as a Greener Store, a store must successfully meet 25 required standards, across eight environmental impact areas, ranging from energy efficiency and water stewardship to renewable energy, and waste diversion, verified by an outside auditor.

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Sources.
Anthony Walters – Head of ESG at Clever Adviser Technology Ltd (Clever)
Market recap Data sourced from FE FundInfo & Koyfin (quoted in Pounds Sterling).
Plans for £200million carbon capture scheme at Deeside waste facility, by Chester Standard, 11/04/24
Clean Energy Developer Solarig to Build $850 Million Sustainable Aviation Fuel Plant in Spain, by ESG today, 04/04/24
U.S. Steel Launches Project to Capture 50,000 Tons of Carbon per Year at Steel Plant by ESG today, 04/04/24
Phillips 66 Converts Oil Refinery to Produce Only Renewable Fuel by ESG Today 11/04/24

Risk Warning: These are Anthony’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.

Regulatory Information: This is a general communication provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Marlborough or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with their own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Marlborough Investment Management Limited, authorised and regulated by the Financial Conduct Authority (reference number 115231). Registered office: PO BOX 1852 Lichfield, Staffordshire, England, WS13 8XU. Registered in England No. 01947598. The Clever Marlborough Model Portfolio Service (‘Clever MPS’) is a collaboration between Marlborough Investment Management Limited as the Discretionary Fund Manager and Clever Adviser Technology Limited, a company registered in England and Wales (company number 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF (“Clever”). Clever is a technology and software provision company which developed a methodology and proprietary suite of algorithms for the monitoring, analysis, collation, and transmission of data on the performance of Investment Funds and related portfolios within the UK market which Marlborough utilises for investment purposes.

The post ESG in 5: 9 April 2024 appeared first on Clever.

Inflation and Interest rates.

Bank of England

Prospects for 2024 interest rate cuts improved as inflation declined to its lowest point in nearly two and a half years, primarily due to slower price increases in food and dining out. February’s decrease from 4.00% to 3.40% indicates that the cost of living is rising at its most sluggish pace since September 2021. However, housing and fuel prices continue to surge.

Meanwhile, inflation in shop prices in the UK has eased to the lowest level for more than two years after retailers cut prices on Easter treats, clothing and electrical goods amid a slowdown in spending by consumers. Industry figures show prices rose at an annual rate of 1.30% in March, down from a rate of 2.50% in February, according to the latest monitor from the British Retail Consortium (BRC) trade body and the market research firm NielsenIQ.

Bank of England (BoE) Governor Andrew Bailey said expectations of interest rate cuts this year were not “unreasonable” and he struck an optimistic tone about the UK economy. The BoE kept its benchmark Bank Rate on hold in March, at a 16-year high of 5.25%. Two Monetary Policy Committee members dropped their calls for a rate hike in the face of easing inflation and Bailey said, “things are moving in the right direction.”

US Federal Reserve

Annual inflation rate in the US unexpectedly edged up to 3.20% in February 2024, compared to 3.10% in January and above forecasts of 3.10%.

U.S. Federal Reserve Chair Jerome Powell struck a cautious tone and continued to focus on the need for more debate and data before interest rates are cut, a move financial markets expect to occur in June.

“Recent readings on both job gains and inflation have come in higher than expected,” Powell said in a speech to the Stanford Graduate School of Business. While policymakers generally agree that rates can fall later this year, he said this will happen only when they “have greater confidence that inflation is moving sustainably down” to the Fed’s 2.00% target.

European Central Bank

Euro zone inflation fell unexpectedly last month, solidifying the case for the European Central Bank (ECB) to start lowering borrowing costs from record highs.

Consumer price growth slowed to 2.40% in March from 2.60% a month earlier, defying expectations for a steady rate as food, energy and industrial goods prices all pulled the headline figure lower. The only potential concern for the ECB will be that services inflation has been holding steady at 4.00% for months now, suggesting that relatively quick wage growth is keeping prices in the sector under constant pressure.

ECB president Christine Lagarde reiterated that “when it comes to the data that is relevant for our policy decisions, we will know a bit more by April and a lot more by June.” Beyond that, the monetary-policy path is unclear.

“Our decisions will have to remain data dependent and meeting-by-meeting, responding to new information as it comes in,” she told a conference in Frankfurt. “This implies that, even after the first rate cut, we cannot pre-commit to a particular rate path.”

Market expectations are for the first ECB interest rate cut to take place in June this year.

Manufacturing

In March 2024, the US Manufacturing PMI was revised lower to 51.9 from 52.2 in February. Despite the marginal slowing in rating, signs of improving wider economic conditions and market demand fed through to a further expansion of US manufacturing production, with the rate of expansion hitting a 22-month high.

The UK Manufacturing PMI moved higher to 50.3 in March from 47.5 in February. The reading pointed to the first expansion in manufacturing activity since July 2022, as output and new orders increased following year-long downturns. Factory production increased for the first time since February 2023, as output growth in the consumer goods sector more than offset downturns in the intermediate and investment goods categories.

The Eurozone Manufacturing PMI was 46.1 in March, slightly lower than the 46.5 posted for the prior month. The reading indicates a three-month low, mainly influenced by changes in suppliers’ delivery times and stocks of purchases following the relief of disruptions due to the Suez Canal issue. Although manufacturing output declined for the twelfth consecutive month, the rate of contraction slowed, reaching its lowest point since April 2023. New orders also saw a less pronounced decrease for the fifth month in a row.

Services

The US Services PMI eased to 51.7 in March, from 52.3 for the prior month. Despite the slowdown, the result marked 13 consecutive months of growth for service providers, extending evidence of robust activity despite the prolonged period of high interest rates by the Federal Reserve.

In the UK, the Services PMI edged lower to 53.4 in March from 53.8 in February. This decrease reflects the slowest growth in business activity within the service sector for three months, with many firms attributing it to constraints on households’ disposable income.

And the Eurozone Services PMI rose to 51.1 in March from 50.2 in the previous month, firmly above market expectations of 50.5 to mark the sharpest growth since June of 2023. It marked the second consecutive month of expansion in the Eurozone’s services activity following six straight months of declines, furthering hopes that the bloc’s services economy will gain some traction despite the prolonged period of restrictive interest rates.

Market performance

Spain led Developed Markets for the month with a gain of over 11%, supported by a rally in Inditex, Santander and Iberdrola to name a few. Santander said it was “considering making more than €6 billion worth of dividend payments and share buybacks after an “excellent” start to 2024”.

Hong Kong was the laggard, as many Chinese real estate stocks including Evergrande Group and Country Garden, are listed on the Hong Kong Exchange, and continue to face a huge debt burden against a backdrop of a large reduction in property demand.

In Emerging Markets, both Peru and Colombia gained over 10%, bolstered by a broader rally in financials and commodities.

The MSCI Egypt Index fell by almost 33% after Egypt’s central bank devalued the Egyptian Pound by 40 per cent and massively raised interest rates to relieve a foreign currency shortage. The movement in currency came as Egypt signed an $8bn loan agreement with the International Monetary Fund, which was conditional on Egypt letting “market conditions determine the price of its currency” and “making foreign exchange available to businesses and private individuals”, the IMF said.

Sector performance.

Commodities and Natural Resources gained almost 10%, driven by higher oil prices as OPEC+ members decided to prolong voluntary output cuts of 2.2 million barrels per day, until June 2024, to stabilise the market.

Naturally, the Oil and Commodity heavy UK Equity Income sector followed suit, up by over 4%.

At the other end of the spectrum, UK Direct Property made a modest gain of 0.12%, a brief bounce against the Year-To-Date decline of almost 1.00%. Despite this, all 44 sectors were positive for the month.

Source: FE FundInfo, 03/04/24

Summary.

There is the possibility that the latest recession in the UK could be one of the shortest ever. GDP returned to growth in January, albeit a very modest 0.20%. Whilst we await the publication of data, if the growth in January continued into February and March, the latest recession will prove to be a mild blip on the economic radar.

Although economic data in Europe generally remains in contraction, there are green shoots of growth in the European services sector, having enjoyed its second consecutive month of growth, reversing the prior trend. Spain stood out this month with a solid double-digit gain backed by the tailwind of positive performance in the financial sector. Despite the challenges faced by the Eurozone, the UT Europe Excluding UK sector has grown by 11% over the last year, proving that markets are a forward-looking discounting mechanism, having priced in most of the poor economic data already.

The recent economic events in Egypt make a compelling case for the importance of diversification. Whilst the European sector has enjoyed double-digit growth over the last year, the MSCI Egypt sector is now down by 1.50% over the same period, despite having peaked at a +72.30% return at the end of January 2024.

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This surge in gold prices, highlighted extensively in gold news and financial services discussions, is attributed to a myriad of factors that have propelled it to unprecedented heights, exemplified by its surpassing $2,300 per ounce mark. As we delve into the article, we will explore the key drivers behind this phenomenon, from central bank manoeuvres to gold’s performance in comparison with other assets.

Factors Driving the Rise in Gold Prices

The surge in gold prices can be attributed to a complex interplay of factors that influence its value in the global financial markets. Here, we dissect the primary drivers:

Economic Indicators:

U.S. Dollar Value: Gold prices inversely correlate with the U.S. dollar’s strength. A weaker dollar makes gold cheaper for holders of other currencies, boosting demand and prices.

Interest Rates: Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.

Market Dynamics:

Demand vs. Supply: The demand for gold from jewelry markets, ETFs, and industrial applications, coupled with constrained production as gold becomes harder to source, creates a supply-demand imbalance, driving prices up.

Investor Behavior: During economic uncertainty or geopolitical tension, gold’s appeal as a safe-haven asset spikes, leading to increased demand and higher prices. This is evidenced by the significant role of geopolitical conflicts, such as the Israel-Hamas conflict, and the anticipation of Federal Reserve interest rate cuts in boosting gold demand.

Global Influence:

Emerging Markets: Strong retail demand in emerging markets, driven by economic growth and wealth accumulation, contributes significantly to the upward price trajectory of gold.

Central Banks: The strategic purchasing of gold by central banks, especially in emerging markets like China and Russia, underscores its evolving role as a cornerstone of financial stability and a hedge against fiat currency depreciation.

These factors collectively underscore the multifaceted dynamics propelling gold prices to record highs, reflecting its enduring value and appeal in the global economy.

Central Banks and Gold Purchases

Central banks have been pivotal in the surge of gold prices, with their strategic purchases significantly influencing the market dynamics. Here’s a breakdown of their activities:

Central Bank Purchases and Gold Demand:

• In 2023, central banks, led by China and Poland, bought over 1,000 tons of gold, demonstrating their substantial influence on gold demand and prices.
• The People’s Bank of China and the National Bank of Poland were prominent buyers, with China adding 225 tons and Poland 130 tons to their reserves, highlighting the strategic importance they place on gold.

Strategic Reserves Accumulation:

• Central banks have consistently been net buyers of gold since 2010, accumulating over 7,800 tons. More than a quarter of this was purchased in the last two years, indicating a strategic shift towards gold in their reserves.
• The trend of increasing gold reserves is expected to continue, with the World Gold Council forecasting that global central banks will remain net buyers in 2024.

Impact on Gold Prices:

• Central bank activities have had a notable impact on gold prices. For instance, 2022 witnessed the largest annual purchase of gold ever recorded at 1,083 metric tons, underlining the significant role central banks play in the gold market.
• This consistent buying pattern by central banks, especially during times of crisis, underscores gold’s role as a long-term store of value and its importance in the financial stability strategies of nations.

Gold’s Performance Against Other Assets

Gold’s remarkable performance against other assets has been a focal point for investors and financial analysts alike. Here’s a comparative overview:

Annual Returns Comparison:

• 1971-2024: Gold’s average annual return was 7.98%.
• 2002-2022: Gold outperformed European government bonds, Euro cash, high-growth emerging market stocks, global ex Europe stocks, and European stocks with an average annual return of 8.51%.
• 2017-2022: Gold saw a 9.53% annual increase, showcasing its resilience and appeal.

Performance in 2023:

• Annual Return: Gold’s annual average return stood at 13.1%.
• Price Fluctuations: Starting at $1,834.39 per ounce and peaking at $2,079.47 per ounce, gold demonstrated a growth of approximately 10.08%. However, a slight decrease to around $2,019.38 per ounce was observed by late December, marking a 2.89% drop from its peak.

Comparison with Other Assets in H1 2023:

• Gold outperformed all major assets except for developed market stocks, increasing by 5.4% in USD terms and closing June at $1,912.25/oz.
• The asset’s low correlation with other asset classes further cements its status as a reliable safe-haven asset, particularly during recessionary periods and stock market pullbacks.

This data underscores gold’s potential to enhance defensive strategies by improving returns, reducing volatility, and mitigating drawdowns, especially in turbulent times.

Conclusion

Throughout this exploration, we have delved into the myriad of factors that have propelled gold prices to unparalleled heights, touching on economic indicators, market dynamics, and the strategic role of central banks. These elements underscore the complexity and interconnectivity of the global financial markets, where gold continues to shine as a beacon of stability and value. The significance of gold’s performance, especially in contrast with other assets, further highlights its resilience and the strategic advantage it offers to investors, particularly in times of economic uncertainty and market volatility.

As we consider the future of gold in the global economy, it’s clear that its role and relevance are far from diminishing. The strategic acquisitions by central banks and the asset’s uncanny ability to outperform in turbulent times suggest that gold will remain an essential component of global financial strategies. The implications of this for investors, policymakers, and the broader economic landscape are profound, signaling a continued reliance on gold as a safe-haven asset and a hedge against instability. This underscores the importance of continued observation and analysis of gold’s market dynamics, as its journey mirrors the evolving challenges and opportunities within the global economy.

https://www.cnbc.com/2023/12/04/gold-prices-set-for-new-highs-amid-economic-geopolitical-uncertainty.htmlhttps://www.trtworld.com/magazine/why-gold-prices-are-hitting-record-highs-17643996https://www.livemint.com/market/commodities/why-are-gold-silver-prices-flirting-with-record-highs-despite-resilient-us-dollar-explained-with-5-reasons-11712368021964.htmlhttps://www.barrons.com/advisor/articles/gold-prices-record-high-outlook-inflation-economy-adbf2806https://www.cnbc.com/2024/04/01/gold-prices-hit-all-time-high-what-to-know-before-investing.htmlhttps://www.cbsnews.com/news/gold-prices-hit-a-new-record-high-reasons-investors-are-buying-in/https://money.com/what-drives-the-price-of-gold/https://www.investopedia.com/financial-edge/0311/what-drives-the-price-of-gold.aspxhttps://www.cbsnews.com/news/how-high-will-the-price-of-gold-go-heres-what-some-experts-think/https://www.goldmansachs.com/intelligence/pages/gold-prices-are-forecast-to-rise-six-percent.htmlhttps://www.gold.org/goldhub/research/gold-market-commentary-december-2023https://www.litefinance.org/blog/analysts-opinions/gold-price-prediction-forecast/https://www.jpmorgan.com/insights/global-research/commodities/gold-priceshttps://www.ssga.com/us/en/intermediary/etfs/insights/whats-driving-central-banks-to-record-gold-purchases-and-willhttps://www.axios.com/2024/01/31/central-banks-buy-goldhttps://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023/central-bankshttps://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q3-2023/central-bankshttps://www.fxstreet.com/analysis/central-bank-gold-buying-in-2023-topped-1-000-tons-just-shy-of-2022-record-202402081629https://www.statista.com/statistics/1061434/gold-other-assets-average-annual-returns-global/https://www.cbsnews.com/news/heres-how-the-price-of-gold-has-changed-in-the-last-year-and-why-you-should-buy-in-now/https://www.gold.org/goldhub/research/gold-mid-year-outlook-2023-between-soft-and-hard-placehttps://www.xetra-gold.com/en/gold-news/news/performance-gold-vs-other-asset-classes/

Important Information:
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Clever to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. You should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with your own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and = current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Clever Adviser Technology Ltd (Clever), a company registered in England and Wales (company number: 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF.

The post Gold News Update: Why Gold Prices Are Hitting Record Highs appeared first on Clever.