Key takeaways
A scandalous former (and would-be) US president dominated media headlines last week, but financial markets were far more interested in the latest US economic news…
Trump found guilty in ‘hush money’ trial, but do markets care?
Over the past few days, media headlines have been filled with the news that former (and would-be) president Donald Trump was found guilty of falsifying business records in order to pay out hush money. While the verdict was damning, it also reportedly boosted Trump’s presidential campaign funding, and there is likely to be a messy legal appeals process from here. But while the US is the world’s most influential market, it’s important to remember that financial markets typically care much more about economic news than political noise. As a result, investors’ attention was focused elsewhere throughout the week.
Pricing pressures could be easing in the US
Much more important news from an investment viewpoint included the latest reading of the US central bank’s preferred measure of inflation – Personal Consumption Expenditure or PCE. Last week saw the release of the April reading for PCE, which showed that inflation had slowed to its lowest rate this year. ‘Core PCE’ (a measure which strips out the prices of more volatile items like food and fuel) rose by just 0.2% in April. As a reminder, this does not mean that the costs of goods and services fell in the US in April, but that the pace of price increases slowed down. Separately, the latest US consumer spending figures were lower than expected.
US economic growth is slowing, but does not seem to be crashing
The wide-ranging data which must be collected in order to measure growth across the whole of the US economy takes time to emerge. A fuller set of economic data now suggests that the US economy grew at a rate of 1.3% in the first quarter of this year (January to March), rather than 1.6% as previously believed. This points to an economy in the process of slowing down, and perhaps reaching more sustainable levels of growth: an economy which is slowing, but not crashing. While it remains to be seen if this trend will continue, these initial signs will be encouraging for the US central bank, which has been attempting to slow down the economy (via higher interest rates) to take the heat out of inflation.
Market moves
In sharp contrast to the old adage ‘sell in May and go away’, May has been a generally positive month for financial markets.
However, the month ended with a testier week, as signs of weaker demand among consumers created some unease among stock market investors, and share prices wobbled accordingly.
It was a topsy turvy few days for bond markets too, as prices weakened early in the week, then rallied as the week drew to a close. (Bond yields always move in the opposite direction to bond prices, and therefore rose at the start of the week before falling as the week ended.)
What to look out for this week
On this side of the Atlantic Ocean, the European Central Bank will be in the spotlight on Thursday, as they announce their latest interest rate decision. Investors hotly anticipate a rate cut.
Returning to US shores: May’s US employment statistics will be released on Friday. Most analysts believe the figures will show unemployment holding steady in May, at 3.9%.
Weekly Bulletin - 3 June 2024
Click here to view pdf versionImportant 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