Here’s our weekly market update – follow Synergi to get regular market data and opinions.
US markets closed the week on a high note with the S&P 500 up +1.4% and the NASDAQ up +1.3%. Materials was the best performing sector, followed by financials and communication services. The worst were healthcare, utilities and consumer discretionary, but even these were up on the day. On this side of the Atlantic, the FTSE 100 closed up +2.0% and the Eurostoxx by +1.8%.
The US posted strong employment data for October, with payrolls up by 261k, well above consensus of 200k and with sizeable positive revisions to September.
Nevertheless, the unemployment rate ticked up slightly to 3.7%. A number of major companies, especially in the tech sector, have announced hiring freezes and layoffs last week including Amazon (hiring freeze), Apple (hiring freeze) and Twitter (laying off large numbers of employees).
On Thursday the Bank of England raised its policy rate by 0.75% to 3% as had been widely expected and it was indicated that further increases in interest rates are likely, but possibly “to a peak lower than priced into financial markets”. The Bank’s forecasts, based on the assumption of rates following the market-implied path, also showed inflation eventually falling far below the Bank’s 2% target in 2025 – again possibly a signal that the Bank sees the market-implied path as too much.
We have the US midterm elections tomorrow, with control of the Senate up for grabs, although Republicans are expected to win a majority in the House of Representatives. Republican control of Congress with a Democrat in the White House has potentially been seen by some analysts as broadly market friendly, but we shall continue to monitor accordingly.
European markets are currently higher, having reversed early declines and US equity futures are pointing to opening up around +0.5% this afternoon.
Closer to home, latest reports suggest Chancellor Hunt will set out tax rises and spending cuts totalling £60bn at the 17th November autumn statement, of which at least £35bn will be in cuts. Treasury sources note decisions on whether to raise benefits in line with inflation and whether to change the pensions triple lock were likely to be made within days so that the OBR could factor them into forecasts.
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