Market Monitor – 18 August 2023
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Market Monitor – 18 August 2023

Global stock markets sustained heavy losses this week with fears of slowing growth and rising interest rates weighing on sentiment

The latest signs that China is struggling to return to growth in the wake of its prolonged Covid lockdown have dragged share prices lower around the world, with investors increasingly concerned about the risk of another global slowdown. Markets also reacted negatively to evidence that the US economy is performing more strongly than expected. With central bank officials still focused on reducing inflation, the resilience of the world’s largest economy makes it more likely that interest rates will rise further this year, and that the long-awaited loosening of monetary policy will be delayed.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.3% down for the week so far, with the S&P 500 falling 2.1%. Official data showed a drop in the number of Americans making new unemployment claims, while retail sales in the US have remained relatively buoyant. Both factors are likely to add to existing inflationary pressures. Minutes from the most recent meeting of the Federal Reserve’s rate setting Federal Open Market Committee indicated that further hikes could be in the pipeline for 2023, and highlighted concerns from some officials about the potentially damaging medium-term impact of tighter monetary policy on business activity.

UK

In the UK, the FTSE 100 closed on Thursday 2.8% down for the week so far, with falling oil prices and sticky core inflation adding to investors’ concerns. While the UK’s headline consumer prices index (CPI) showed a welcome fall, core CPI – which excludes more volatile elements such as food and fuel – remained unchanged in July, thus raising the likelihood of further rate rises in the final months of the year. Data showing that wage growth had hit a record high did little to improve the mood, but there was a welcome fall in company insolvencies reported in England and Wales.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 1% for the week, while France’s CAC 40 lost 2%. Stocks in the eurozone are particularly sensitive to the health of the Chinese economy, and this week’s downbeat data was bad news for the likes of consumer goods companies and motor manufacturers. The Netherlands became the latest European economy to fall into a technical recession following two consecutive quarters of contraction. However, sentiment among eurozone businesses appears to be improving.

Asia

In Asia, the Hang Seng index in Hong Kong slumped 3.9% as official figures highlighted weakening retail sales, property prices and industrial output. There were also concerns about the stability of the heavily indebted Chinese real estate sector. The unexpected decision by the People’s Bank of China to cut key interest rates was unable to cheer markets. Japan’s Nikkei 225 index of leading shares fell 2.6% despite starting the week positively on the news that the Japanese economy had grown twice as quickly as expected in the second quarter of the year. Stocks in Tokyo came back to earth on Thursday after data showed Japan’s exports had fallen for the first time in more than two years due to weakness in key Chinese markets.

11 August
17 August
Change (%)
FTSE 100
7524.2
7310.2
-2.8
FTSE 250
18799.7
18356.1
-2.4
S&P 500
4464.1
4370.4
-2.1
Dow Jones
35281.4
34474.8
-2.3
DAX
15832.2
15676.9
-1.0
CAC 40
7340.2
7191.7
-2.0
ACWI
684.7
668.2
-2.4
Hong Kong Hang Seng
19075.2
18326.6
-3.9
Nikkei 225
32473.7
31626.0
-2.6

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 17 August 2023.

18 August 2023
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Content Marketing Executive
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Market Monitor – 18 August 2023

Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk.  Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk.  Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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