Financial Advice in London Blog

Last week investors were focused on US inflation data and speeches from Federal Reserve officials. US stock performance was muted Monday-Wednesday while investors waited for the inflation data. In the event, Thursday’s release of the personal consumption expenditures price index, came in close to expectations and sparked a positive response from investors with stocks rallying strongly to end the week. The PCE data for January came in at a 2.8% annual rate showing that inflation is continuing to rise but is slowing.

Full report
https://realmim.com/stocks-finish-the-week-on-a-high-after-us-inflation-data/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In a quiet week in terms of economic data releases, global stocks moved higher. The US small-cap Russell 2000 was a notable outlier (once again) and ended the week lower.

In the US, minutes from the Fed’s latest meeting were released. It seems that officials are still looking for more evidence that inflation is heading back to the target of 2% before they will be comfortable lowering rates. Stocks rallied anyway with investors focusing more on quarterly earnings which have, in the main, beaten expectations – strong earnings by Nvidia brought attention back on AI. Markets now see the odds of a first rate cut in June as a little above 50%.

Full report
https://realmim.com/stocks-higher-last-week-with-focus-on-us-quarterly-earnings/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In the US, inflation data was hotter than anticipated at 3.1% for January (2.9% forecasted). This caused a rethink of when the Fed might begin rate cuts. Stocks sold-off following the data but recovered, helped by UK CPI data which unexpectedly showed annual inflation held steady at 4% in January. Even with weaker-than-anticipated US retail sales data on Thursday, the majority of investors are now looking at a date beyond May for the first cut. With the US economy remaining strong some Fed officials have commented that there is no rush to lower rates just yet.

Full report
https://realmim.com/markets-rethink-the-likely-date-that-fed-will-start-cutting-rates/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

UK inflation figures are due this week as well as all-important GDP data from the ONS. The UK economy shrank by 0.1% in the third quarter of 2023 and if, as expected, the fourth quarter shows a similar contraction, it would mean the UK tipped into a technical recession at the end of last year. The yield on the UK 10-year gilt ended last week above 4% and remains above that level today (Monday)

Full report
https://realmim.com/uk-may-have-dipped-into-a-recession-last-year-data-will-tell-us-this-week/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In the US The Fed kept interest rates on hold for the fourth month running with Chair Powell commenting that while it would be appropriate to lower rates at some point this year, it is unlikely that a cut will happen as soon as March. Markets are now pricing in less than a 20% chance of a March cut.

Full report
https://realmim.com/us-jobs-surprise-reduces-chance-of-a-rate-cut-in-march/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Investors are generally optimistic going into 2024 and expect the Fed to cut rates as early as March but stocks came under pressure in a cautious first week of the year and the US 10yr Treasury yield climbed back above 4%.

Minutes from the December Federal Open Market Committee (FOMC) showed members agreeing to maintain a restrictive approach for now while expecting to cut rates before the end of the year.

Full Report:

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’