Global stock markets bounced back from last week’s heavy losses, with the latest economic data in the United States helping to calm investors’ nerves.
Falling inflation in the US has made it almost certain that the Federal Reserve will cut interest rates next week. Markets also appeared to welcome the measured performance by Democratic candidate, Kamala Harris, in Tuesday’s presidential debate. Forecasts for slowing global demand, meanwhile, drove fresh declines in oil prices: they hit their lowest level since early 2023 at the start of the week.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.9% up for the week so far, while the S&P 500 gained 3.5% and moved closer to the all-time highs recorded earlier in the summer. Technology stocks in particular staged a strong recovery on Wednesday after official figures showed the rate of inflation had fallen to 2.5%, its lowest level since the start of 2021. The slowing pace of price rises and weakness in the US labour market has set the stage for the Fed to reduce borrowing costs, but the size of next week’s cut remains unclear.
UK
In the UK, the FTSE 100 closed on Thursday 0.8% up for the week so far, lagging other major markets after weaker oil prices weighed on major energy companies. Data also showed the British economy had failed to grow for a second consecutive month in July. In addition, statistics highlighted a slowdown in wage growth and a fall in new job vacancies, although reports suggested the UK economy is forecast to return to growth in the months ahead. The Bank of England is expected to leave interest rates unchanged at its September meeting, with markets currently pricing in one more cut before the end of 2024.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 1.9% for the week, while France’s CAC 40 gained 1.1%. The European Central Bank continued to set the pace in terms of monetary loosening, cutting rates for the second time this year on Thursday. The ECB also cut its eurozone growth forecasts – an unsurprising move given recent lacklustre GDP data. A major investment bank predicted the German economy would contract for a third consecutive quarter between July and September, while investor confidence across the euro area was also reported to have declined. European Union officials called for stimulus measures to help address growth and productivity issues in the bloc.
Asia
In Asia, the Hang Seng index in Hong Kong fell 1.2% after statistics showed that inflation in China continues to run at a low level, reflecting sluggish domestic demand. The data was backed up later in the week by unexpectedly weak import figures. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 1.2% as the yen eased against the dollar on hopes that the Fed would cut rates by only 0.25% rather than 0.5% next week. Stocks in Tokyo had struggled at the start of the week following last Friday’s Wall Street slump and comments from a Bank of Japan official that further interest rate hikes were in the pipeline.
September 6 | September 12 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8175.4 | 8241.0 | 0.8 |
FTSE 250 | 20499.3 | 20695.8 | 1.0 |
S&P 500 | 5408.4 | 5595.8 | 3.5 |
Dow Jones | 40345.4 | 41096.8 | 1.9 |
DAX | 18301.9 | 18507.6 | 1.1 |
CAC 40 | 7352.3 | 7435.1 | 1.1 |
ACWI | 802.6 | 821.6 | 2.4 |
Hong Kong Hang Seng | 17444.3 | 17240.4 | -1.2 |
Nikkei 225 | 36391.5 | 36833.3 | 1.2 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 12 September 2024.
