In summary
- Markets start the week a little steadier, despite latest Middle East conflict entering its fourth day
- A busy week ahead for investors as central bankers meet against a difficult Middle East backdrop
- US Federal Reserve meets, but more than an interest rate decision for investors to watch out for
- Oil prices complicate central banks’ outlook for inflation expectations
Markets start the week a little steadier, despite latest Middle East conflict entering its fourth day
Markets finished last week in risk-off mood, as investors reacted to surprise pre-emptive Israeli attacks on Iran’s nuclear facilities in the early hours on Friday, risking a wider Middle East conflagration. Despite continued attacks by both sides on each other over the weekend, equity markets have steadied a little this morning – it seems that, for now at least, Israel has refrained from targeting Iran’s oil production and shipping facilities, while Iran has so far avoided targeting US assets or people in the region. Looking at the Brent crude oil price, despite being the big winner on Friday up +7.02% to US$74.23 per barrel (having pared intraday gains of as much as +13% to its highest level since February), earlier this morning the Brent price was relatively more measured, up +0.69% at US$74.74 per barrel.
A busy week ahead for investors as central bankers meet against a difficult Middle East backdrop
Notwithstanding ongoing developments in the Israel-Iran conflict (and amid a three-day G7-group of nations summit which got underway yesterday in Canada), this week is likely to be dominated by central bank news. We have interest rate decisions due out from the Bank of Japan (Tuesday), the US Federal Reserve and Sweden’s Riksbank (both Wednesday), and the Bank of England, Switzerland’s National Bank and Norway’s Norges Bank (all on Thursday). Aside Sweden and Switzerland where small rate cuts are expected, other central banks are expected to stay unchanged this week. Also due this week is consumer inflation data for the UK (Wednesday) and Japan (Friday). Finally, there is a somewhat mixed-batch of China economic data out already this morning – while China retail sales were better-than-expected, there is little solace yet to be found in Chinese house prices with both new and secondary prices falling again last month.
US Federal Reserve meets, but more than an interest rate decision for investors to watch out for
The US Federal Reserve (Fed) is holding its latest two-day meeting this week starting on Tuesday, with a rate decision due to be announced at 7pm UK time on Wednesday and followed by Fed Chair Powell’s press conference at 7:30pm UK time. While no change in Fed interest rates is expected this week, also out on Wednesday will be the Fed’s latest quarterly ‘Summary of Economic Projections’, where markets will be on the look-out for any changes to Fed members’ median forecast for US economic growth, inflation and interest rates. Finally, it will be interesting to see if the Fed responds to any questions around Powell’s successor when his term ends in May next year – there has been speculation recently that US President Trump could announce Powell’s replacement for next year early – while Powell would likely still serve out his term, the naming of a ‘shadow Fed Chair’ in the wings could risk undermining Powell’s authority and limit his ability to influence markets.
Oil prices complicate central banks’ outlook for inflation expectations
Despite no expected change in Fed interest rates this week, it is not unreasonable to hope that after last week’s softer-than-expected US consumer and producer inflation rates, that the data might have been enough to prompt some possible dovish Fed messaging, at the edges at least. But even if a dovish tilt to guidance does feature, that is probably as far as the Fed is likely to go for now – with the Middle East seeing a fresh conflict open up between Israel and Iran, that could lead to a knock-on effect of a higher-for-longer oil price, and with it risks of a resurgence in inflation pressures. That risks spoiling a hitherto easier oil price narrative that had taken hold for much of this year – back in January, Brent crude oil prices were even higher than they are now, and for the most part this year oil prices have been in a downward price-channel, given a mix of increased oil supply alongside fears of trade-tariff induced weaker economic demand. But, with fresh Middle East and associated oil price risks, any signs of renewed price pressures will be something which not just the Fed, but also other central banks, will be watching very closely.
Important information
The information in this article does not constitute advice or a recommendation and investment decisions should not be made on the basis of it. This article is for the information of the recipient only and should not be reproduced, copied or made available to others. The price of investments and the income from them may go down as well as up and neither is guaranteed. Investors may not get back the capital they invested. Past performance is not a reliable indicator of future results.
The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com).
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/individuals/resources/insights/weekly-market-commentary
Weekly Market Commentary
In summary
Markets start the week a little steadier, despite latest Middle East conflict entering its fourth day
Markets finished last week in risk-off mood, as investors reacted to surprise pre-emptive Israeli attacks on Iran’s nuclear facilities in the early hours on Friday, risking a wider Middle East conflagration. Despite continued attacks by both sides on each other over the weekend, equity markets have steadied a little this morning – it seems that, for now at least, Israel has refrained from targeting Iran’s oil production and shipping facilities, while Iran has so far avoided targeting US assets or people in the region. Looking at the Brent crude oil price, despite being the big winner on Friday up +7.02% to US$74.23 per barrel (having pared intraday gains of as much as +13% to its highest level since February), earlier this morning the Brent price was relatively more measured, up +0.69% at US$74.74 per barrel.
A busy week ahead for investors as central bankers meet against a difficult Middle East backdrop
Notwithstanding ongoing developments in the Israel-Iran conflict (and amid a three-day G7-group of nations summit which got underway yesterday in Canada), this week is likely to be dominated by central bank news. We have interest rate decisions due out from the Bank of Japan (Tuesday), the US Federal Reserve and Sweden’s Riksbank (both Wednesday), and the Bank of England, Switzerland’s National Bank and Norway’s Norges Bank (all on Thursday). Aside Sweden and Switzerland where small rate cuts are expected, other central banks are expected to stay unchanged this week. Also due this week is consumer inflation data for the UK (Wednesday) and Japan (Friday). Finally, there is a somewhat mixed-batch of China economic data out already this morning – while China retail sales were better-than-expected, there is little solace yet to be found in Chinese house prices with both new and secondary prices falling again last month.
US Federal Reserve meets, but more than an interest rate decision for investors to watch out for
The US Federal Reserve (Fed) is holding its latest two-day meeting this week starting on Tuesday, with a rate decision due to be announced at 7pm UK time on Wednesday and followed by Fed Chair Powell’s press conference at 7:30pm UK time. While no change in Fed interest rates is expected this week, also out on Wednesday will be the Fed’s latest quarterly ‘Summary of Economic Projections’, where markets will be on the look-out for any changes to Fed members’ median forecast for US economic growth, inflation and interest rates. Finally, it will be interesting to see if the Fed responds to any questions around Powell’s successor when his term ends in May next year – there has been speculation recently that US President Trump could announce Powell’s replacement for next year early – while Powell would likely still serve out his term, the naming of a ‘shadow Fed Chair’ in the wings could risk undermining Powell’s authority and limit his ability to influence markets.
Oil prices complicate central banks’ outlook for inflation expectations
Despite no expected change in Fed interest rates this week, it is not unreasonable to hope that after last week’s softer-than-expected US consumer and producer inflation rates, that the data might have been enough to prompt some possible dovish Fed messaging, at the edges at least. But even if a dovish tilt to guidance does feature, that is probably as far as the Fed is likely to go for now – with the Middle East seeing a fresh conflict open up between Israel and Iran, that could lead to a knock-on effect of a higher-for-longer oil price, and with it risks of a resurgence in inflation pressures. That risks spoiling a hitherto easier oil price narrative that had taken hold for much of this year – back in January, Brent crude oil prices were even higher than they are now, and for the most part this year oil prices have been in a downward price-channel, given a mix of increased oil supply alongside fears of trade-tariff induced weaker economic demand. But, with fresh Middle East and associated oil price risks, any signs of renewed price pressures will be something which not just the Fed, but also other central banks, will be watching very closely.
Important information
The information in this article does not constitute advice or a recommendation and investment decisions should not be made on the basis of it. This article is for the information of the recipient only and should not be reproduced, copied or made available to others. The price of investments and the income from them may go down as well as up and neither is guaranteed. Investors may not get back the capital they invested. Past performance is not a reliable indicator of future results.
The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com).
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/individuals/resources/insights/weekly-market-commentary
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