Market Monitor – 12 August 2022
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Market Monitor – 12 August 2022

The possibility that inflation may have peaked in the world’s largest economy provided a major boost to global stock markets this week. Data published on Wednesday 10 August showed that the annual pace of price rises in the US slowed to 8.5% in July, down from 9.1% the previous month, largely as a result of falling fuel bills.
Investors hope that, as inflation subsides, the Federal Reserve and other central banks will slow the pace of interest rate rises – to the benefit of higher-growth businesses such as technology firms in particular. Fed officials were keen to stress, however, that a single monthly fall in inflation does not mean the US economy is certain to avoid a prolonged downturn. It is entirely possible that recent oil-price falls could be reversed, leading to a fresh increase in inflationary pressures.
There was also positive news on the inflation front from China, where July’s 2.7% rate was below analysts’ expectations as well as Beijing’s own 3% target. But the ongoing energy crisis in Europe, exacerbated by the conflict in Ukraine and sanctions on Russia, continued to worry investors in the eurozone and the UK.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.6% up for the week so far, with the S&P 500 gaining 1.5% to reach its highest level since May. Wednesday’s positive inflation figure provided new impetus to the recent rally and gave markets hope that a serious slowdown may be avoided, despite the Fed’s recent rate rises. Strong company earnings figures on Thursday delivered an extra dose of good news, while investors also welcomed data showing that rises in factory-gate prices have started to slow.

Europe

In the UK, the FTSE 100 closed on Thursday 0.4% up for the week, with gains limited by falls in oil and commodity prices, as well as the gloomier outlook for the British economy. The rising price of natural gas and electricity have combined to magnify the UK’s cost-of-living crisis, and the government is facing growing pressure to provide additional support with energy bills during the coming winter while also increasing windfall taxes on suppliers.
In Frankfurt, the DAX index ended Thursday’s session up 0.9% for the week, while France’s CAC 40 gained 1.1%. Drought conditions across Europe’s rivers are hampering efforts to switch to new sources of energy as supplies from Russia dry up, while a heatwave in southern Europe has severely disrupted agricultural production

Asia

In Asia, the Hang Seng index in Hong Kong had dipped 0.6% by Thursday’s close: despite China’s July inflation figure coming in lower than expected, the month-on-month increase raised fears that central bankers may scale back recent stimulus measures. Japan’s Nikkei 225 index of leading shares, meanwhile, lost 1.3% as a result of weakness in the semiconductor sector and a rise in the value of the yen versus the dollar following positive inflation news from the US.

5 August
11 August
Change (%)
FTSE 100
7439.7
7465.9
0.4
FTSE All-share
4111.5
4131.3
0.5
S&P 500
4145.2
4207.3
1.5
Dow Jones
32803.5
33336.7
1.6
DAX
13573.9
13694.5
0.9
CAC 40
6472.4
6544.7
1.1
ACWI
639.5
651.1
1.8
Hong Kong Hang Seng
20201.9
20082.4
-0.6
Nikkei 225
28175.9
27819.3
-1.3

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, as at 11 August 2022.

16 August 2022
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Market Monitor – 12 August 2022

1 Manufacturers’ Goods Index, February, United States Census Bureau, 4/4/2022.
2 Oil giant Shell to take £3.8bn hit by leaving Russia, bbc.co.uk, 7/4/2022.

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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 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 Cownnaught 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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