Further record highs for US stock markets

Key takeaways

Investors continued to push US shares higher despite some disappointing economic data. Gold rose again, confirming its position as the best performing asset so far this year. In contrast, oil remains the weakest performer despite geopolitics causing the price to climb.

Another week, another record high for US shares
After a nervous start to the week for financial markets, the S&P 500 Index closed at its 45th record high so far in 2024. The Dow Jones Index, which is highly populated by shares in financial companies, also reached an all-time high. Investor sentiment was helped by favourable third-quarter earnings updates from major US banks. This helped to outweigh some disappointing economic data; there was a higher-than-expected rise in September inflation compared with the previous month and a surprise increase in weekly jobless claims. Coming so soon after September’s bumper US job creation numbers, this continues a recent theme of confusing and sometimes contradictory messaging arising from employment updates.

A rebound for the UK economy
After generating no growth during June and July, the UK economy recovered slightly during August, expanding by 0.2% compared with the previous month and in line with expectations. All main areas of the economy showed signs of improving, led by the production and construction sectors. While the economy is growing again, it is at slower rate than in the first half of the year. Despite the improvement in household incomes earlier this year, consumer spending remains relatively cautious, while the higher value of sterling is proving unhelpful for exports. Accounting for inflation, market analysts expect that the UK economy will grow by 1% during 2024.

Investors in China await details on further stimulus
Investors are still waiting for the Chinese government to expand on its recent economic package to boost the world’s second largest economy. At the end of a week during which the rally in Chinese stock markets had gone into reverse, a press conference by the finance minister did not reveal how much stimulus the government would be willing to inject into the economy. Many investors believe that China needs to revive consumer confidence, which has been weak since pre-pandemic moves by the government to cool the property market. Lacklustre household demand is resulting in very weak inflation, a move that could quickly slip into deflation if further action is not taken.

Market moves

• The US 10-year Treasury yield rose (and prices fell) as investor expectations fell that the US central bank will cut interest rates in November in response to the latest economic data.

• Closing the week at $2655/oz., gold is the best performing asset so far this year.

• Despite a firmer oil price over the week, this remains the weakest performing asset this year so far.

What to look out for this week

• On Tuesday, UK employment data for September will be released. US corporate earnings season (where businesses report their latest earnings and their outlook for the period ahead) begins in earnest.

• On Wednesday, UK inflation for September will be reported.

• On Thursday, the European Central Bank is expected to announce a 0.25% cut in interest rates, to 3.5%.

Important Information

Handelsbanken Wealth & Asset Management Limited is authorised and regulated by the Financial Conduct Authority (FCA) in the conduct of investment and protection business, and is a wholly-owned subsidiary of Handelsbanken plc. For further information on our investment services go to wealthandasset.handelsbanken.co.uk/important-information. Tax advice which does not contain any investment element is not regulated by the FCA. Professional advice should be taken before any course of action is pursued.

• Find out more about our services by contacting us on 01892 701803 or exploring the rest of our website: wealthandasset.handelsbanken.co.uk
• Read about how our investment services are regulated, and other important information: wealthandasset.handelsbanken.co.uk/important-information
• Learn more about wealth and investment concepts in our Learning Zone: wealthandasset.handelsbanken.co.uk/learning-zone/
• Understand more about the language and terminology used in the financial services industry and our own publications through our Glossary of Terms: wealthandasset.handelsbanken.co.uk/glossary-of-terms/

All commentary and data is valid, to the best of our knowledge, at the time of publication. This document is not intended to be a definitive analysis of financial or other markets and does not constitute any recommendation to buy, sell or otherwise trade in any of the investments mentioned. The value of any investment and income from it is not guaranteed and can fall as well as rise, so your capital is at risk.

We manage our investment strategies in accordance with pre-defined risk objectives, which vary depending on the strategy’s risk profile.

Portfolios may include individual investments in structured products, foreign currencies and funds (including funds not regulated by the FCA) which may individually have a relatively high risk profile. The portfolios may specifically include hedge funds, property funds, private equity funds and other funds which may have limited liquidity. Changes in exchange rates between currencies can cause investments of income to go down or up.

This document has been issued by Handelsbanken Wealth & Asset Management Limited. For Handelsbanken Multi Asset Funds, the Authorised Corporate Director is Handelsbanken ACD Limited, which is a wholly-owned subsidiary of Handelsbanken Wealth & Asset Management, and is authorised and regulated by the Financial Conduct Authority (FCA). The Registrar and Depositary is The Bank of New York Mellon (International) Limited, which is authorised by the Prudential Regulation Authority and regulated by the FCA. The Investment Manager is Handelsbanken Wealth & Asset Management Limited, which is authorised and regulated by
the FCA.

Before investing in a Handelsbanken Multi Asset Fund you should read the Key Investor Information Document (KIID) as it contains important information regarding the fund including charges and specific risk warnings. The Prospectus, Key Investor Information Document, current prices and latest report and accounts are available from the following webpage: wealthandasset.handelsbanken.co.uk/fund-information/fund-information/, or you can request these from Handelsbanken Wealth & Asset Management Limited or Handelsbanken ACD Limited: 77 Mount Ephraim, Tunbridge Wells, Kent, TN4 8BS or by telephone on
+44 01892 701803.

Registered Head Office: No.1 Kingsway, London WC2B 6AN. Registered in England No: 4132340