Published On: 21 November 2023

As we step into November, global markets face various challenges and opportunities. Recent geopolitical events, such as the Middle East conflict, have triggered concerns about wider implications, influencing oil prices and creating a ripple effect across economies. In this update, we’ll delve into the impacts on key markets globally. 

United Kingdom: A Mixed Economic Landscape
Economic growth in the UK remains modest, with GDP increasing by just 0.2% in August 2023. Although services showed robust growth, manufacturing, and construction sectors experienced declines. Efforts to curb inflation are showing limited results, as the rate remains at 6.7%, notably driven by fuel costs. Despite a slight drop in food prices, overall food costs are still elevated.

On a positive note, wages rose by 7.8% year-on-year between June and August, surpassing inflation for the first time in almost two years. The Institute of Fiscal Studies (IFS) cautions against premature tax cuts, highlighting the delicate balance between economic growth and inflation control.

Europe: Economic Contraction and Policy Decisions 
The European Central Bank (ECB) left interest rates unchanged after ten consecutive rate hikes, citing a need to address rising living costs. Inflation across the eurozone decreased to 4.3% in September from its peak in October 2022. The ECB believes the current rates can contribute to meeting its 2% target.

Economic challenges persist, with a contraction in the eurozone economy during the last quarter. Germany faces a prolonged recession, and the European Commission downgraded its growth forecast for the country in 2024. Despite these challenges, Spain’s resilience is attributed to a diverse economic base.

United States: Economic Momentum and Policy Outlook
October brought positive economic figures for the US, with GDP rising by 4.9% in Q3, driven by strong consumer spending. Despite concerns about military funding for Ukraine and rising interest rates, the retail sector performed well, and job additions exceeded expectations.

Interest rate projections vary among economists, with potential impacts on mortgage rates. Inflation remains at 3.7%, reflecting increased housing and petrol costs. The tech industry sees ongoing challenges, with Microsoft facing a tax dispute and job cuts at LinkedIn.

Far East: Economic Dynamics and Geopolitical Tensions 
In China, Evergrande’s shares surged after trading resumed, amid challenges faced by the real estate sector. China’s economic growth slowed to 4.9% in Q3. Tensions between the US and China persist, impacting chip exports. Relations between China and Russia appear more positive, with joint efforts highlighted at a global summit.

Japan’s business sentiment has improved, and the country’s export market shows promise. South Korea maintains its policy rate amidst private-sector debt concerns. Hong Kong and Japan’s stock indices experienced declines in October.

Emerging Markets: Diverse Trends and Economic Predictions 
India and China are expected to drive half of global growth in 2023 and 2024, according to the IMF. In Russia, capital controls are implemented to stabilise the currency. Brazil’s robust economic growth is reflected in a positive labour market, with job additions exceeding expectations. 

As we navigate through these global trends, staying informed and adaptable is crucial for making informed investment decisions. 

We hope we have kept you well-informed about global economic trends, their ripple effects on financial markets, and their implications for investments and businesses. As the world economy navigates uncertainties. 

If any of the above affects you and you’d like to discuss our opinion on this fund and how it may or may not continue to fit your investment goals or risk tolerance, please call us on 01420 83517 or email info@murdochasset.co.uk 

 


Source – https://murdochasset.co.uk/wp-content/uploads/2023/11/MarketCommentaryCompliance_Nov23.pdf

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