🌍 Market Report.
Today’s UK economic data is not very positive. We have zero GDP growth, coming in at 0% against the expected 0.2%. The latest economic data showed stronger than expected economic growth in the UK so far. Industrial production fell by 0.8% when it was supposed to rise by 0.3%, also considering that the previous period showed a growth of 0.8%. All in all, the UK economy seems to be slowing down.
💷 These weaker than expected data could soften the Bank of England and lead to rate cuts before November.
📉 In any case, markets have not reacted very strongly to the data so far. The FTSE 100 is trading around 8200 points, 300 points below its highs in the 8500 area reached in May. In other words, we are only 3% off the highs. The pound is also little changed; still above 1.30 and back from the 132.50 area reached in August.
📈 Amazon will invest £8 billion over 5 years (2024-2028) to build and operate data centers in the UK, creating over 14,000 jobs annually. This investment is estimated to contribute £14 billion to UK GDP and support an average of over 14,000 jobs each year in local businesses. Customers like AstraZeneca, Cancer Research UK and others use AWS to lower costs, innovate faster and increase productivity. Increasing SMB adoption of cloud/AI could create an estimated £38 billion in value for the UK by 2028.
🏦 JPMorgan dialed back expectations for 2023 net interest income as rates trends aren’t as rosy as analysts projected. The banking index fell nearly 2% led by JPMorgan’s 5% slide as investors worried about weaker loan performance. While the Fed eased proposed capital hikes, it said ensuring stability requires balance after banks made valid criticism. Notably, the US financial sector is the best performer so far this year. With a rise of more than 20%, almost twice the return of the technology sector.
📊 US core inflation data will be released shortly. Barring surprises, it should remain at 0.2% monthly and 3.2% annualised. Any scenario far from these numbers could cause volatility in the dollar, bonds and equities, as it directly affects the Fed’s plan.
📉 Market View: The stock markets’ recovery is losing strength. The Mini S&P 500 futures seem to be stuck in the 5500 area and have slightly retreated in the last hours. Nevertheless, we believe that the most significant resistance is around 5550 or 5600. The Nasdaq 100 also seems to be struggling to break above 18800.
💵 The dollar index DXY has weakened from yesterday’s levels of 101.75 points and is currently retreating to the 101.40 area. The EUR/USD seems to be based in the 1.1015 area and is now bouncing towards the 1.1050 area. The US 2-year bond continues to cool and has returned 3.55% in the last few hours.
🇪🇺 In Europe, the DAX 40 also fails to make much progress. On Monday, it failed to break above 18500 points, although its real resistance would be more in the 18600 area. It is currently trying to move into positive territory, trading at 18345 points.
🛢️ Crude oil is bouncing higher, with Brent crude up about $2 since yesterday, where it reached the $68.50 per barrel area, an important support. Gold is holding strong at $2550 an ounce and Bitcoin is retreating slightly towards the 56700 area.
🌍 Geopolitics:
In an intense US election debate, aggressive Donald Trump focused more on confronting the moderators than his opponent, avoiding addressing Kamala Harris directly. They discussed the economy, immigration and foreign policy, especially Israel and Ukraine. Trump criticised Harris for not implementing standard solutions in government for the past three and a half years, suggesting she could solve problems with executive orders by ‘getting the president out of bed’ today. He also warned of the risks of World War III and criticised Biden, who he said is ‘missing’ and ‘was kicked out of the presidential campaign like a dog’. Polls on networks and ABC News showed Trump as the winner of the debate. Taylor Swift publicly endorsed Harris, while Elon Musk and Robert Kennedy Jr. backed Trump.
🚀 The Netherlands and the US have authorised Ukraine to use long-range missiles to attack Russia. It is seen as a response to the sale of Iranian missiles to Russia. This comes hours after images on social media revealed Ukrainian drone strikes on civilian homes in Moscow. There are fears that Ukraine could use these weapons against civilians, as happened this summer when a US HIMARS missile struck a Crimean beach, killing several civilians. All of this increases the risks of an even greater Russian response, with Russia being able to employ, as mentioned above, a strike against those who are facilitating these attacks.
🤝 Trade relations between Russia and Turkey appear to be stalled for geopolitical reasons. Although Turkey-Russia ties are strategic in energy, trade and tourism, geopolitics causes regular tensions between the NATO member and Russia. The latest dispute is Putin’s refusal to visit Ankara without the use of Russian military escort aircraft. Not only that, Putin’s security team has also refused to allow the president to stay in US hotels such as the Hilton as risky. The Turkish government, for the time being, has considered it unlikely to accede to these requirements, as NATO defence systems installed in Turkey could identify Russian aircraft as enemies. In other words, there can be no guarantee that President Putin’s plane will not be attacked on its journey to Ankara.
