Market Monitor – 8 December 2023
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Market Monitor – 8 December 2023

Global stock markets drifted lower this week as investors await signs from central banks of imminent changes to monetary policy.

While last month’s gains were largely driven by hopes of interest rate cuts in the early months of 2024, markets have become more nervous – although more clarity is expected next week after the US Federal Reserve, the European Central Bank (ECB) and the Bank of England all meet to assess the economic situation.

While analysts do not forecast rate changes in any direction at this point, policymakers are expected to provide further clues as to the likely path for rates over the next 12 months. There are nagging fears, however, that rates could be maintained at their current high levels for longer than anticipated if central banks believe inflation has not yet been brought under control.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.4% down for the week so far, with the S&P 500 dipping 0.2%. As well as the Fed decision, investors are eagerly awaiting Friday’s employment data: a weakening jobs market will make early rate cuts more likely given the Fed’s desire to engineer a “soft landing” following recent economic turbulence. There are already signs that the US economy’s longstanding resilience is starting to be tested, with a drop in factory orders reported in November and a steeper decline in consumer confidence than expected. However, technology stocks managed to advance after the latest developments in artificial intelligence (AI) boosted sentiment in the sector.

UK

In the UK, the FTSE 100 closed on Thursday 0.2% down for the week so far, with ongoing weakness in oil and, in particular, commodity prices holding the index back. Britain’s construction sector continues to struggle, with homebuilding activity reported to have declined to levels not seen since the depths of the global financial crisis in 2009. There was some positive news for carmakers after European Union officials agreed to delay the introduction of strict rules on electric vehicle production. These had been expected to result in significant tariffs on exports. Meanwhile, the UK’s service sector returned to growth in November, although businesses warned of increasing pressure from high borrowing costs.

Europe

In Frankfurt, the DAX index ended Thursday’s session up 2.4% for the week, while France’s CAC 40 gained 1%. Fresh data showing economic weakness in Germany – with trade performance deteriorating in October and factory orders declining more recently – did little to dent confidence as the DAX closed at a record high on Wednesday. Investors are more focused on the prospect of the ECB cutting rates early in the new year now that inflation appears to be reverting to normal levels.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 2.9%, with stocks falling back early in the week after credit agency Moody’s cut China’s rating in the wake of recent concerns about the stability of the country’s financial system. Share prices on the mainland suffered to an even greater degree, declining to pre-pandemic levels, while the latest subpar economic data did little to improve investors’ moods. Japan’s Nikkei 225 index of leading shares, meanwhile, lost 1.7% as strength in the yen held back gains among the country’s major international businesses. The currency rose as speculation grew that the Bank of Japan could be on the verge of raising interest rates. There were gains among Japanese chipmakers, however, on news of an AI breakthrough in the US.

December 1
December 7
Change (%)
FTSE 100
7529.4
7513.7
-0.2
FTSE 250
18408.7
18618.7
1.1
S&P 500
4594.6
4585.6
-0.2
Dow Jones
36245.5
36117.4
-0.4
DAX
16397.5
16629.0
1.4
CAC 40
7346.2
7428.5
1.1
ACWI
698.5
696.0
-0.4
Hong Kong Hang Seng
16830.3
16345.9
-2.9
Nikkei 225
33431.5
32858.3
-1.7

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 7 December 2023.

8 December 2023
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Market Monitor – 8 December 2023

Important information

For marketing purposes.

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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.

 

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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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