Market Monitor – 20 October 2023
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Market Monitor – 20 October 2023

Global stock markets endured another week of volatility and decline as fears about the potential impact of the intensifying conflict in the Middle East grew

Geopolitical concerns have led investors to seek safety in more defensive assets and helped commodity prices remain elevated – a development that has the potential to increase inflationary pressures around the world. There remains considerable uncertainty around central banks’ next moves, with the latest signs of economic resilience in the US and sticky inflation in the UK making future monetary policy changes even more difficult to predict. The emerging consensus among investors appears to be that while policymakers are unlikely to increase interest rates to a significant degree in the months ahead, the prospect of any imminent cuts is receding rapidly.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.8% down for the week so far, with the S&P 500 dropping 1.2%. Interest rate expectations rose again this week after latest data showed strong performance in retail sales as well as continued resilience in the labour market, with a fresh fall in unemployment claims. In a speech on Thursday, Federal Reserve chair, Jerome Powell, did little to reassure investors that the Fed’s programme of monetary tightening was near its end. There was mixed news in terms of third-quarter company earnings, and downbeat statements from the banking sector offset more positive reports from major technology firms.

UK

In the UK, the FTSE 100 closed on Thursday 1.3% down for the week so far despite the boost provided by high oil prices to London-listed energy businesses. Investors in Britain are also worried about the possibility of further rate hikes after the Bank of England’s chief economist warned at the start of the week that greater effort will be needed to bring inflation under control. To illustrate his point, official figures published on Wednesday showed that the UK Consumer Prices Index in September had remained unchanged at 6.7%, currently the highest rate among the G7 countries. An easing of wage inflation and a fall in job vacancies were welcomed but reports of redundancies at a number of major employers highlighted the ongoing impact of rising costs and high interest rates on the British economy.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 0.9% for the week, while France’s CAC 40 lost 1.2% as America’s interest rate jitters spread to Europe. There was some positive news with the eurozone countries posting a trade surplus given a year-on-year drop in energy prices and reports of improving investor sentiment in Germany. However, earnings statements from major consumer goods companies indicated that shoppers are increasingly struggling to tolerate rising prices.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 2.9% as geopolitical concerns dominated. Shares in China were also hit by the latest salvo in the technology trade war with the US, with the American government imposing new restrictions on the sale and purchase of microchips used in artificial intelligence applications. Positive economic data showing better-than-expected growth in the third quarter of the year was overshadowed by concerns about the property sector and the prospect of a debt default by another major developer. Japan’s Nikkei 225 index of leading shares, meanwhile, lost 2.7%, largely as a result of nervousness around US monetary policy. It was reported that the country’s prime minister was planning to ease tax policies to help households cope with the rising cost of living.

13 October
19 October
Change (%)
FTSE 100
7599.6
7499.5
-1.3
FTSE 250
17454.2
17213.1
-1.4
S&P 500
4327.8
4278.0
-1.2
Dow Jones
33670.3
33414.2
-0.8
DAX
15186.7
15045.2
-0.9
CAC 40
7003.5
6921.4
-1.2
ACWI
657.8
649.3
-1.3
Hong Kong Hang Seng
17813.5
17295.9
-2.9
Nikkei 225
32316.0
31430.6
-2.7

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 19 October 2023.

20 October 2023
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Market Monitor – 20 October 2023

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.

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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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