Market Monitor – 12 January 2024
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Market Monitor – 12 January 2024

Global stock markets had a volatile week as investors struggle to work out exactly when central banks will start cutting interest rates.

An unexpected rise in inflation in the United States, announced on Thursday, appeared to throw a spanner in the works. However, by close of trading, Wall Street had apparently reached the conclusion that December’s slight uptick in the Consumer Price Index was nothing more than a blip, with markets still expecting the Federal Reserve to cut rates at some point in the current quarter. Further declines in oil prices at the start of the week helped ease inflationary pressures, although investors remain concerned about the impact of ongoing attacks on commercial shipping in the Red Sea. One report said the crisis had already led to a 1.3% reduction in global trade.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.7% up for the week so far, with the S&P 500 gaining 1.8%. US markets enjoyed positive sessions on Monday and Wednesday as hopes of imminent rate cuts rose, with technology stocks making particularly strong gains. Although both indexes’ initial reaction to December’s inflation reading was sharply negatively, subsequent falls in bond yields helped calm nerves. Separate data early in the week indicated that consumers’ inflation expectations have eased further.

UK

In the UK, the FTSE 100 closed on Thursday 1.5% down for the week so far, with Monday’s 4% fall in crude values – sparked by Saudi Arabia’s decision to cut export prices – weighing on the index’s major energy stocks. There were renewed signs of weakness in the British employment market, with a large recruitment firm warning of a slowdown in hiring. But analysts said the UK was on course to bring inflation down below its 2% target in the first half of the year, and sentiment was further boosted by relatively upbeat trading statements from construction sector firms.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 0.3% for the week, while France’s CAC 40 lost 0.4%. Investors welcomed the news that unemployment in the eurozone had fallen to its lowest ever level, but economic news elsewhere was more downbeat. Industrial output in Germany was weaker than expected in November, while sentiment among the country’s construction firms has also fallen. A senior European Central Bank official warned that the euro area may already be in recession, although this could increase the chances of the bank making early rate cuts this year.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 1.4%, with its recent run of losses finally ended by a positive session on Thursday as investors started to hunt for bargains. The earnings outlook for China’s biggest businesses was downgraded by a major bank on Wednesday, although markets welcomed the move by regulators to ease some trading restrictions. Japan’s Nikkei 225 index of leading shares, meanwhile, surged 5% to reach its highest level since 1990. Weak wage data and a drop in household spending appeared to have reduced the chances of a Bank of Japan interest rate hike. This fed through into a weaker yen, which has in turn driven up the values of Tokyo’s multinational businesses.  

January 5
January 11
Change (%)
FTSE 100
7689.6
7576.6
-1.5
FTSE 250
19210.4
19107.9
-0.5
S&P 500
4697.2
4780.2
1.8
Dow Jones
37466.1
37711.0
0.7
DAX
16594.2
16547.0
-0.3
CAC 40
7420.7
7387.6
-0.4
ACWI
715.4
723.0
1.1
Hong Kong Hang Seng
16535.3
16302.0
-1.4
Nikkei 225
33377.4
35049.9
5.0

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 11 January 2024.

12 January 2024
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Market Monitor – 12 January 2024

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

 

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

 

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

 

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

 

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

 

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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