City thinking, local knowledge

October Market Commentary

By Questa Chartered

September has seen its fair share of economic highs and lows across the globe. While sluggish growth and high inflation continue to be the norm in many countries, some are defying the odds. What’s the secret behind the strong performance of emerging markets in Asia? And why are some advanced economies faltering? Let’s get into it.

United Kingdom

The UK economy isn’t doing as well as we’d like. A recent report by the Organisation for Economic Co-operation and Development (OECD) warns that the UK could see faster-rising prices than any other advanced economy this year. The OECD suggests that inflation could average around 7.2% in 2023. That’s a number that should make anyone sit up and take notice, right?

Is it all doom and gloom, then?

Not quite. A huge investment is about to pour into the UK’s manufacturing sector. BMW announced that it will start producing two new electric Mini cars at its Oxford plant. The company is planning to spend a whopping £600 million on plant upgrades, aiming for production to begin in 2026. 

But it’s not all smooth sailing. The UK’s finance sector has had a turbulent month. The state-owned British Business Bank reported a pre-tax loss of over £147 million. And let’s not forget the ongoing saga about Nigel Farage’s Coutts account; it keeps making headlines but has yet to find a resolution.

Israel-Gaza War

Let’s make no bones about it, like all conflicts, the Israel-Gaza conflict is not just a geopolitical event; it’s a human tragedy affecting countless innocent lives. In this context, it’s important to remember that financial markets are not always our priority and are rarely isolated from these real-world issues.

As we consider the financial implications, let’s never lose sight of the broader human cost of this conflict. Our thoughts are with all those affected, and we hope for a peaceful and swift resolution to the turmoil.

As you’d expect, the conflict has led to notable volatility in Israeli equities, especially those closely tied to Israel’s domestic economy. Additionally, oil prices have surged, impacting the global economy and, by extension, individual investment portfolios.

While short-term market fluctuations are inevitable, they shouldn’t dictate long-term investment strategies. For UK investors, it’s essential to stay informed and perhaps re-evaluate asset diversification to navigate these uncertain times.

We take a closer look at the implications of this tragic conflict here: https://www.questachartered.co.uk/israel-gaza/ 

Europe

September was an eventful month for Europe as well. The European Central Bank took the unprecedented step of raising the eurozone interest rates for the tenth consecutive time, reaching a record 4%. Why? Inflation, that old nemesis, is to blame. So what’s going on in Germany? The country has slid into a technical recession, and business sentiment is on the decline for the fifth consecutive month. It seems that Germany’s economic struggles can be attributed to several factors, including high energy costs and weak growth in China.

But here’s something to chew on: Carrefour, the French supermarket chain, has started naming and shaming products that are shrinking in size but not in price. They’re putting stickers on the shelves to alert customers. A clever way to keep manufacturers in check, wouldn’t you say?

United States

Over in the United States, GDP grew by 2.1% in the second quarter of 2023. Sounds good, but public sentiment doesn’t match the numbers. Many Americans aren’t pleased with how President Biden is handling the economy. A recent Wall Street Journal poll revealed that nearly two-thirds of the people disapprove of his approach to inflation. And speaking of jobs, despite industrial action across sectors like the automotive industry, the US job market remains robust.

Far East

The economic picture in China remains complex. The country is experiencing a consecutive monthly fall in exports, and the ongoing crisis in the property market isn’t helping matters. But despite these headwinds, economists expect China to meet its 5% growth target for the year

Meanwhile, Japan is gearing up to ease the impact of inflation with a new economic stimulus package. And did you hear about their successful rocket launch with a lunar lander? They’re prepping for a moon landing next year. How’s that for ambition?

The Final Word

Before we sign off, a note on the extraterrestrial. Reports of alien sightings and mummified remains have been making the rounds, especially in Las Vegas and Mexico. Whether you’re a believer or a sceptic, the truth remains elusive. In the end, the only aliens we’re sure about are the ones in the movies. So, while the world’s economy has its ups and downs, at least we’re all still on Planet Earth. For now.

So, what’s your takeaway? Whether it’s preparing for inflation or planning a trip to the moon, the world keeps spinning, and we’ve got to keep up.

 

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