- Asia markets start the week positively – carrying on momentum from Friday’s close.
- US stocks ended the week up on hopes of a rate cut next month.
- But volatility remains the only certainty.
- UK-side, the Budget dominates sentiment, as business leaders threaten to cut investment.
Emma Wall, Chief Investment Strategist, Hargreaves Lansdown:
“Once again, Fed policy is leading the market – as markets do an about turn on last week’s bearish sentiment. The new optimistic tone is down to comments from New York Fed President John Williams on Friday that a bank cut is still on the cards next month, despite sticky inflation and mixed jobs data. The S&P 500 rallied 0.98% to close on Friday, and the Russell 2000 and NASDAQ also closed up. But it was a rose-tinted end to one of the worst trading weeks in months, thanks to swirling concerns that the macro data simply isn’t compelling enough to warrant a rate cut next month, and that despite recent share price falls AI stocks remain overvalued.
Asia markets have continued some of Friday’s positive momentum, with the Shanghai Stock Exchange Composite and the Nikkei trading just up from flat. The European open is off to a positive start with the FTSE 100 up 50 points this morning.
The UK Budget, due on Wednesday, dominates domestic sentiment with mixed expectations from both investors and business leaders. This morning, CBI (Confederate of British Industry) boss Rain Newton-Smith is due to deliver a speech at the group’s annual conference which is expected to urge the Chancellor to support British business and the UK economy. It comes a week after former Bank of England chief economist Andy Haldane raised concerns that Budget rumours alone have stunted business spending and, in turn, economic growth.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Shares in mining Titans BHP and Anglo American are broadly unmoved this morning after news that a tentative takeover approach by BHP had been aborted. Anglo has already inked a merger deal with Canada’s Teck resources subject to shareholder and regulatory approval. The market has warmed to the idea of the copper focussed combination, meaning that Anglo’s valuation is looking fuller than it has for some time.
The BHP share price has drifted in line with iron ore prices the last couple of years. As a result, its paper has devalued as a deal currency. But it has some attractive organic growth opportunities as it seeks to diversify into other commodities. It’s one to keep an eye on but as with the broader sector the fast-moving macroeconomic environment carries significant short-term risks.”
