The latest economic news and market highlights from the UK and abroad.
The key takeaways
⤴️ Inflation jumps – UK inflation hit 2.3% in October, higher than expected (2.2%) and above last month’s 1.7% - mainly due to the rise in the energy price cap.
🛍️ Sales disappoint – UK retail sales fell 0.7% month-on-month in October, worse than the predicted 0.3% drop - likely reflecting Budget uncertainty affecting consumer confidence.
🥊 Nvidia beats – Nvidia’s earnings, once again, soared past estimates, with profits more than doubling year-on-year, proving the AI boom isn’t slowing down yet.
🔦 Google’s under the spotlight – while Nvidia continues to power on, Google faces heat. The US Department of Justice announced it's taking aim, to force the company to sell off its search engine, Chrome, to end internet search dominance.
🎭 Tensions at G20 – world leaders met at the G20 summit in Rio, Brazil, but found little agreement against a backdrop of geopolitical tension. Little progress has been made on global unity ahead of Trump taking office in January.
What does that mean for you and your clients?
UK inflation rose to 2.3% in October, mainly a result of a 10% hike in the Ofgem energy price cap. Coupled with the recent budget measures, which are expected to be at least marginally inflationary, this could influence the Bank of England’s (BoE) approach to interest rate cuts going forward.
UK retail sales slowed in October, down 0.7% to September. Retailers suggest it was due to lower consumer confidence in the lead up to the Budget. However, with real wages still rising and unemployment remaining low, there’s room for a rebound in the months ahead.
The world’s largest company, Nvidia stole the spotlight, reporting quarterly revenue of $35bn, and doubled profits, compared to a year earlier. This performance underscores the unrelenting global demand for AI and Nvidia’s leading role in the sector.
But not all tech giants had a good week. Nvidia’s ‘Mag 7’ counterpart, Google (Alphabet), faced serious pressure to sell off Chrome, the world’s most popular web browser. The US Department of Justice believes Google is involved in anti-competitive practices, and if successful will be a landmark moment against one of the world’s biggest technology companies.
Meanwhile, world leaders met at the G20 summit in Rio, which was more show than substance. Ongoing geopolitical tensions worldwide, and the uncertainty of a transition to a new government in the US, there was little common ground. With not much agreed on, it highlighted the ongoing uncertainty that often pushes investors toward safe havens like gold.
Chart of the week
Source: Bloomberg and Goldman Sachs Asset Management, November 13, 2024
Why’s this worth sharing?
As the old adage goes, time in the market is better than timing the market.
The above chart shows the returns year-to-date (YTD) of investing $10,000 into the S&P 500 at the start of the year and then staying out the market, versus investing another $1,000 each month. Whether investing at market highs or lows, the difference in returns is minimal, highlighting the benefits of being invested versus remaining on the sidelines.
The Markets
US
Both the S&P 500 and Nasdaq continued to lead equity market performance, a result of strong company earnings as well as an expected corporate friendly environment from the incoming Trump administration next year. The US has been remarkably resilient this year, with the S&P exceeding the majority of Wall Street year end targets by over 20% on average.
UK
The large cap FTSE 100 index also delivered positive returns this week, with company earnings overcoming some disappointing economic data. Accounting software firm Sage delivered strong results and a £400m share buyback, while oil majors BP and Shell also rose on the back of higher oil prices.
Bonds
Both UK and US 10-year yields were relatively flat, ending the week marginally lower, as investors weighed up geopolitical concerns alongside the trajectory for inflation and rate cuts in the coming months.
Oil
Oil rose above $74 a barrel due to escalation in the conflict between Russia and Ukraine, which may affect supply. There is also speculation that OPEC may restrict output at their next meeting given lower demand.
Gold
Similarly due to concerns over geopolitical tensions, gold performed well following a sell off last week. The stalemate at the G20 conference did nothing to improve sentiment, as the world seems to become ever more fragmented.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.13% | 9.18% |
| FTSE 250 | -0.54% | 6.48% |
| S&P 500 | 1.44% | 27.09% |
| NASDAQ | 1.81% | 25.43% |
| Hang Seng | 1.04% | 21.72% |
| Nikkei 225 | -1.12% | 4.87% |
| Brent Crude | 4.82% | -2.51% |
| Gold Spot | 5.31% | 31.86% |
| UK 10yr Gilt yield | -3bps | +90bps |
| US 10yr Treasury yield | -3bps | +55bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close Thursday 21st November 2024.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
