Written by Anthony Walters – Clever‘s Head of ESG & Christos Chountoulesis our Investment Analyst, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
Market Recap.
The FTSE 100 ETF was the largest gainer last week, adding 2.27%. The Nasdaq 100 ETF was second best, gaining 1.88%. The S&P 500 ETF was largely flat (0.29%) whilst the Dow Jones Industrial Average ETF was down 0.49%.
At US sector level, Consumer Discretionary led for the week, adding 3.28%. This was followed by Communications and the Technology sector, each returning 3.23% and 2.79% respectively.
News.
Pound sterling has hit a 15-month high after British labour data underscored market expectations of more interest rate rises from the Bank of England (BoE). Current market pricing indicates roughly a further 140 basis points of hikes from the BoE, much more than for the U.S. Federal Reserve or European Central Bank.
Geopolitics.
The United States and China will look to revive efforts to combat global warming this week, in bilateral meetings that observers hope will raise the bar on ambitions ahead of UN-sponsored climate talks in late 2023. The talks follow two other high-level U.S. visits to China this year, as the world’s largest greenhouse gas emitters work to stabilise a relationship strained by trade disputes, military tensions, and accusations of spying.
Inflation.
The rate of price growth in the US dropped to its slowest pace in more than two years last month, helped by cheaper used cars. Inflation rose 3% in the year to June, according to data, from 4% in May. Inflation has fallen sharply from a peak of more than 9% in June 2022 and the latest reading marks the slowest pace since March 2021.
Central Banks.
Britain’s economy is so far proving resilient to higher interest rates, but it will take time for the full impact of the climb in borrowing costs to feed through, the Bank of England said in its half-yearly Financial Stability Report. Governor Andrew Bailey said, “We will continue to monitor credit conditions for signs of tightening which are not explained by changes in the macroeconomic outlook.”
Commodities.
It was a big week for silver, as the precious metal gained 7.55%, followed by Aluminium, which gained 6.41%. Corn did not ‘pop’ as it lost 9.20% alongside coal, which fell by 8.34%.
Notably, WTI Crude Oil gained 3.22% whilst it’s London-traded equivalent gained 2.67%. Gains in Oil could be a sign that OPEC+ production cuts could be starting to take effect.
ESG.
BNP Paribas Asset Management (BNPP AM) announced its 2023 AGM season voting record, revealing that it rejected more than half of corporate climate strategy – or “Say on Climate” – resolutions, and opposed nearly half of director appointments, primarily for diversity reasons. BNP Paribas AM also said that it rejected 48% of director appointment resolutions, with most due to companies missing the firm’s voting policy’s board diversity targets.
Week Ahead.
Tuesday: US retail sales (MoM) are expected to grow by 0.50% compared to prior growth of 0.30%.
Wednesday: UK and EU CPI Inflation is reported, with the market hoping for a reduction on both fronts. UK CPI currently sits at 8.70% whilst EU CPI is a more modest 5.50%.
Thursday: The US reports initial jobless claims (237,000 previously) and Existing Home Sales (Forecast to be 4.23m v 4.30m previously).
Sources.
Anthony Walters – Head of ESG, Christos Chountoulesis – Investment Analyst 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.
News – Pound hits 15-month high after British jobs data reinforces rate-hike bets, by Alun John, Reuters, 11/07/23
Inflation – US inflation rises at slowest pace in two years, by Natalie Sherman, BBC, 13/07/23
Central Banks – Bank of England’s Bailey speaks about UK financial outlook, Reuters, 12/07/23
ESG – BNP Paribas AM Votes Against More than Half of Company Climate Plans, by Mark Segal, ESG Today, 13/07/23
Geopolitics – US, China aim to revive climate cooperation as tensions simmer by Valerie Volcovici, 17/07/23
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.
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