The latest economic news and market highlights from the UK, US and Asia.
Key takeaways:
🌪️ Hurricane season – Hurricane Milton hit Florida late on Wednesday, causing multiple deaths alongside widespread flooding, damage and power outages.
🎢 Chinese roller-coaster – markets jumped earlier in the week before dropping again on Wednesday as doubts grew around the details of the government’s stimulus plan.
👆 US inflation up – September’s CPI rate came in at 0.2%, while core CPI (which excludes food and energy) was 0.3%. Both were ahead of expectations as costs rose for food, shelter and transportation.
💥 UK economy expands – mainly driven by the production sector, August GDP figures showed 0.2% growth, after staying flat for the previous two months.
💶 Euro sales rise – Euro Area retail sales grew 0.30% in August, boosted by automotive fuel sales.
What does that mean for you and your clients?
Despite governor Ron DeSantis saying Florida avoided a worst-case scenario, and Hurricane Milton being considerably briefer than Helene two weeks ago, it still wreaked an incredible human and economic cost from both winds and water. It’ll take days or weeks to fully assess the damage in monetary terms and its effect on the US economy.
Meanwhile, China has continued weeks of volatility following stimulus measures announced at the end of September to provide a much-needed boost to the economy. This was initially very well received by investors causing a big surge in the index. However, after more gains earlier this week following China’s Golden Week holiday, shares slumped back down again as specific stimulus details remained scarce. Although it’s too early to tell whether the rally is over or if this is just a short blip, China remains an important diversifier among global regions.
Chart of the week - buyback and dividend yields
Source: JP Morgan, Bloomberg, FTSE, LSEG Datastream, MSCI, S&P Global
Why’s this worth sharing?
Our chart of the week looks at the current yields from different regional equity markets. This includes both dividend yield and the buyback yields, where companies return value to investors by buying back their own stock. The UK stands out, providing the highest yield level by some margin, even against the US.
Despite being unloved and overlooked for some time, UK equities look very attractively valued versus other developed economies. This sets the market up well for potential outperformance going forward. Add to this the relatively higher levels of yield that could be earned and it’s clear why we continue to be biased towards our home market.
The Markets
China’s slide hits the UK – sectors tied to China, like miners and financials, fell. UK homebuilder Vistry also saw heavy falls due to cost concerns.
US markets at another record high – the S&P 500 and NASDAQ saw mild gains this week, to reach new highs, as activity stayed relatively muted ahead of Q3 bank earnings.
Asia mixed – the Hang Seng dropped China stimulus concerns, while in Japan the Nikkei finished in positive territory on tech stocks and a weaker Yen.
Gold falls – after big gains year-to-date, gold saw a small fall over the week as investors reassessed mixed US inflation and labour data.
Oil volatility – oil rose and then fell amid Middle East tensions and the likelihood of a wider conflict in the region slowing production. Investors are now waiting on a possible retaliation on Iran from Israel.
| ‎ | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.51% | 9.93% |
| FTSE 250 | -0.13% | 8.01% |
| S&P 500 | 1.89% | 19.28% |
| NASDAQ | 0.84% | 23.81% |
| Hang Seng | -3.52% | 27.59% |
| Nikkei 225 | 1.25% | 8.97% |
| Brent Crude | 1.41% | 3.20% |
| Gold Spot | -0.33% | 28.09% |
| UK 10yr GILT | +20bps | +58bps |
| US 10yr Treasury | +22bps | +11bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close Thursday 10th October 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.
