Market Update – 11th October 2023.

11th October 2023

This week’s headlines have centred around the conflict between Hamas and Israelis that has seen many people either wounded, killed or displaced from their homes. On Saturday, an attack by the group, Hamas, occurred and was swiftly followed by Israel declaring war on the Gaza Strip. Since the tragic news hit the media, and following the US distributing reserves to Israel, markets reacted with defence stocks rising on Monday – some of which earned spots as the top five gainers of the S&P 500. Meanwhile, the price of oil jumped up more than 3% after the fighting began before settling back down. However, as Israel is a smaller producer of oil, analysts do not expect its price to jump much higher.

Despite the conflict over the weekend, investors’ attention stayed firm on what the Fed will do concerning interest rates and their battle with inflation. On Monday, Philip Jefferson, vice chair of the Fed’s board, presented at the National Association for Business Economics where he hinted that the Fed may decide to place a ‘stay’ on interest rates when they meet on the 1st of November. His speech said that the recent rise in Treasury yields might just provide the slowing effect on the economy needed for officials to take their foot off the pedal of monetary tightening and assess its full impact as it flows through the region. In response, the FTSE 100 enjoyed a one week high on Tuesday, gaining 1.4%.

Over in China, their highest court issued guidance this week on improving the legal landscape for businesses in the private sector. The focus was mainly on building positive sentiment towards private businesses by giving authorities power to sanction against behaviours like slandering and misinformation online. The initiative will be implemented in order to support the private sector during China’s crucial road to recovery and joins other measures such as tax extensions for the sector introduced in July this year. Investors were also pleased by reports that Beijing authorities are considering raising their budget deficit to help meet growth targets.

In the UK, a report produced by the British Retail Consortium revealed that sales reduced significantly in September due to the cost of living crisis that has prevented consumers from making purchases on big ticket items. Sales rose 2.7% last month down from 4.1% in August and below the 12 month average of 4.2%.

Still to come this week we have US CPI data, UK GDP and industrial/manufacturing production and Ireland’s inflation rate.

Nicola Tune, Portfolio Specialist