Making sense of this crazy world
“Whilst the AI music is playing, you’ve got to get up and dance”
Bond and equity markets have had a good few days. Spurring the markets on has been successive days of falling oil prices, proving to be the longest losing streak in more than a year. However, on Wednesday US Treasury yields soared by the most since Liberation Day, due to fears that the US economy is overheating and fading hopes of a resolution to the Middle East crisis. The oil price rose by circa 4% before falling back, yet again.
In New York, President Trump has found Andy Burnham to be more palatable than Sir Keir Starmer, but for how long?
At the same event, Trump pronounced in his United Nations speech that he might just ‘annihilate’ Iran, but he then went on to predict that he will likely make a peace deal after November’s mid-term elections. Classic Trump!
Trump and the Chinese President, Xi Jinping, met in Washington, with technology and economic friction being the main points of discussion.
“Whilst the AI music is playing, you’ve got to get up and dance” was the quote in an FT article this week. They were referring to the claims of how AI robots could end up killing us all. The author points out that tech markets experienced a brief bout of hiccups, following the claims, but investors have shrugged off the comments about the demise of the human race and have responded positively to other news.
The Nasdaq this week hit a record high, recovering its poise from its recent slump. Nvidia, though, is no longer the darling of the index. Analysts expect Nvidia’s earnings to double this year, but there are concerns that profitability is under pressure because of competition and rising chip costs.
A nod to the UK from the Organisation for Economic Co-operation and Development (OECD) this week, who state they cannot see good reasons why UK interest rates should rise, unlike other developed economies.
It’s so easy to get into the weeds of what’s going on and concentrate on specifics, but it’s important for us as wealth managers to keep stepping back and looking at the bigger picture. This week, I thought I would share the year-to-date performance of the main indices. Corporate earnings have been strong and have largely driven markets forward and, in some cases, have made them more resilient than expected in the face of so much geopolitical uncertainty.
This week’s content:
- Oil price falls on successive days
- Markets are holding up, but the backdrop is becoming harder to read
- The Nasdaq reaches a record high
- Nvidia: good value or not?
- The OECD says there is no need for UK interest rates to rise
- Year-to-date performance of the major indices
- Conclusion
Oil price falls on successive days
Brent Crude was heading for its longest losing streak in more than a year as hopes were raised at the start of the week regarding progress on a peace pact with Iran. Saudi Arabia also moved to restart its East-West pipeline that bypasses the Strait of Hormuz.
The falling oil price eased inflation concerns, at least temporarily, although prices have since risen towards the end of the week, before dropping back a tad. The pipeline bypassing the Strait hopes to be in use by the weekend.
Markets are holding up, but the backdrop is becoming harder to read
As reported in the FT on Wednesday, US Treasury yields soared the most since Trump’s Liberation Day tariff. New data has underscored worries that the US economy is overheating and hopes for a resolution to the Middle East crisis have faded.
The surge in yields came after S&P Global’s September Purchasing Managers Index report showed US business output accelerating at its fastest pace in five years this month.
Continues…
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Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.