Global News Summary: 23-27 September 2024

Global markets experienced mixed movements as economic growth, central bank actions, and inflation data shaped investor sentiment. In the US, the Fed’s focus on potential rate cuts amid a stable but slowing economy was highlighted, while Vice President Kamala Harris emphasized a pro-business agenda. The UK saw increased capital spending plans and stable inflation, but household incomes declined, raising concerns about consumer resilience. Germany and the Eurozone faced temporary economic challenges, while Japan maintained a moderate recovery outlook. China’s aggressive monetary measures, including a rate cut and potential capital injections into state banks, boosted short-term market sentiment but raised questions about long-term growth sustainability. Meanwhile, Australia's currency rose as the RBA held rates steady, and global markets reacted positively to falling bond yields and central bank rate cuts. Commodities and cryptocurrencies saw gains, though oil prices fluctuated due to geopolitical tensions. Overall, investor focus remains on upcoming economic data and central bank decisions for further direction.

Here are the details:-

United States

Economic Growth: The Federal Reserve remains focused on economic stability, with Vice President Kamala Harris promoting a pro-business agenda, emphasizing "free and fair markets" and government-private sector collaboration. The Fed's preferred inflation gauge and consumer spending rose slightly in August, suggesting a slowing yet stable economy. GDP growth for Q2 is expected to be strong at +3.0% QoQ.

Jobs: Attention is on upcoming employment data as market participants assess the labor market's strength, with expectations of 224,000 initial jobless claims.

Debt Securities: Treasury yields fell, with the 10-year yield hovering around 3.75%, supported by expectations of further Fed rate cuts. The Bloomberg Dollar Spot Index declined for four consecutive weeks, reflecting cautious market sentiment.

AI: OpenAI introduced a new voice assistant for its ChatGPT service and faced leadership changes with the departure of CTO Mira Murati. Micron Technology reported strong demand for AI-related products, boosting its financial outlook and lifting stock prices.

United Kingdom

Economic Growth: Labour leader Keir Starmer announced plans for a significant increase in capital spending to boost public investment, backed by the OECD. Household disposable income fell to £34.5k in the fiscal year ending March 2023, below pre-pandemic levels, due to rising prices and higher interest rates.

Jobs: The labor market faces challenges with wage inflation and employment constraints. The Royal College of Nursing reported that its members rejected a pay offer, despite Chancellor Rachel Reeves’s claims of meaningful public sector wage increases.

Debt Securities: BoE Governor Andrew Bailey stated that interest rates are unlikely to return to ultra-low levels without a significant economic crisis.

Inflation and Recession: Inflation remains stable at 2.2% YoY in August, but consumer spending has not yet recovered to pre-pandemic levels, raising concerns about economic resilience.

Eurozone

Economic Growth: Germany’s economy is expected to rebound, with Bundesbank President Joachim Nagel attributing recent weakness to temporary factors such as high inflation and cautious consumer behavior.

Debt Securities: Several European central banks, including those in Switzerland, Hungary, and the Czech Republic, cut interest rates, contributing to positive market sentiment.

Inflation: The ECB is expected to continue its rate reduction path, with inflation projected to stabilize at 2% by 2025.

Japan

Economic Growth: Japan's economic outlook remains stable with minor growth concerns. The government maintained its view of a moderate recovery, supported by stable consumer prices.

Debt Securities: Japan's 10-year bond yield remained steady as market participants await further signals from the Bank of Japan regarding future monetary policy moves.

Inflation: Core consumer prices rose 2.8% YoY in August, slightly higher than the previous month, mainly due to increased processed food costs.

Australia

Economic Growth: The Australian dollar rose to a 19-month high against the US dollar, boosted by China’s policy measures to support economic growth and stability in the region.

Debt Securities: The RBA held interest rates steady, noting that the share of borrowers in severe financial distress remains small, though risks from China persist.

Inflation and Recession: CPI data released on 25 September showed inflation at +2.7% YoY, indicating stable price levels.

China

Economic Growth: The PBOC cut its main policy rate to 1.5% and reduced the reserve requirement ratio by 0.5% to stimulate economic growth. Additionally, China is considering injecting up to 1 trillion yuan ($142 billion) into its largest state banks to boost lending capacity. The CSI 300 Index saw its best week since 2008, reflecting short-term investor optimism.

Debt Securities: Concerns remain over the sustainability of China’s economic recovery, with structural issues in the property sector and export markets continuing to weigh on growth.

Inflation: Inflation data remains subdued, with the central bank focused on stabilizing capital markets.

Switzerland

Debt Securities: The Swiss National Bank cut interest rates as part of coordinated global easing efforts. Swiss watchmakers urged the government to address the strength of the franc, which is impacting exports.

Global Markets and Commodities

Commodities: Oil prices fluctuated due to geopolitical tensions in the Middle East, ending the week at $68.58 per barrel. Gold prices fell to $2,651.82 per ounce as market sentiment shifted.

Cryptocurrencies: Bitcoin and Ether saw gains, with Bitcoin reaching $65,722.96 (+1.6%) and Ether $2,700.82 (+2.6%), driven by increased demand for digital assets.

These developments reflect a mix of economic resilience, cautious optimism, and ongoing geopolitical and structural challenges across major global markets. Investors remain focused on upcoming economic data and central bank decisions to gauge the direction of future policy moves.