Omnis Investments would like to offer our deepest condolences to the royal family. Her Majesty Queen Elizabeth II spent her life dedicated to the service of her people, led by example, and gave herself to her country and the commonwealth. May she rest in peace.
Last week’s performance – major stock markets
S&P 500 | -4.77% |
Nikkei 225 | -2.29% |
CSI 300 | -3.94% |
Euro Stoxx 50 | -1.95% |
FTSE 100 | -1.56% |
Commentary
US:Stocks suffer largest weekly drop in three months
Stocks fell sharply as inflation fears intensified. Inflation came in at 8.3% for the 12 months ending August, higher than many expected. If we exclude food and energy, inflation jumped to 6.3%, the highest since March. The higher-than-expected inflation number puts this week’s meeting of the Federal Reserve (Fed) in to focus, where it is expected that policymakers will vote on a large interest rate hike.
Japan:Yen continues to weaken
The Japanese government announced that it will drop its COVID-related ban on individual tourists and remove its limit on daily international arrivals to the country. Trade data for August showed that Japan’s exports continue to grow strongly. The Japanese Yen continues to weaken. The Fed’s rapid rate hikes while the Bank of Japan stands still has helped drive the yen steadily lower.
China:Currency weakness and property sector weighs on markets
China’s stock markets fell as currency weakness and downbeat property data overshadowed surprisingly strong factory output and retail sales indicators.The Fed’s stance to interest rate hikes has boosted the dollar, pressuring most emerging market currencies, while China’s surprise decision to lower key interest rates has accelerated the yuan’s slide.China reported better-than-expected growth in factory output and retail sales last month.However, the property sector extended its slump. New home prices in 70 cities, excluding state-subsidized housing, fell in August for the 12th straight month.
Europe:A deepening economic slowdown
Shares in Europe pulled back amid signs of a deepening economic slowdown. The European Commission published proposals that could raise up to EUR 140 billion to soften the impact of soaring energy costs. Economic sentiment in Germany was worse than expected in September due to worries about energy shortages and declines in incoming orders, industrial production, and exports.Eurozone industrial production fell in July due to soaring energy costs and supply chain bottlenecks. The decline was the biggest in more than two years
UK: Inflation remains elevated
The British pound depreciated against the U.S. dollar, sinking to levels last hit in 1985. Fears of a looming recession and a less aggressive stance to interest rate hikes compared to the US contributed to this downward pressure. Inflation in the UK came in at 9.9% in August. This reading marked a decline from the 10.1% registered in July. Falling fuel prices drove this slowdown. However, core inflation, which excludes food and energy costs, quickened to 6.3% from 6.2%. The economy expanded 0.2% in July, after a drop of 0.6% in June, when there were two days of public holidays.