Market Commentary Week ending 22nd September 2024
USA: Long awaited action by the US central bank and consecutive all-time highs for the S&P 500 index.
Investors saw stronger swings in the US markets last week when the Fed officials announced that the key interest rates will decrease by 50 basis points. Immediately following the announcement, the S&P 500, Nasdaq 100 and Russell 2000 rose 0.71%, 0.95% and 2.00%, respectively. Regarding further interest rate cuts, the head of the US central bank, Mr. Powell, did not comment much, but the markets still expect to see two cuts of 25 basis points each this year.
One of the best-looking sectors is energy. After a prolonged decline, the sector rallied just over 3.00% last week. And such companies as “ConocoPhillips” or “Exxon Mobil” bounced 4.68%, 2.87% respectively. Of course, the rebound in both WTI and Brent oil prices, which are around 4.50%, contributed to the growth of the energy sector respectively.
It is interesting that the S&P 500 index recorded its highs for the 39th time last week — for the first time in 2024. When in 2022 or 2023 The S&P 500 index managed to cross its highs only once. On Friday last week, the markets were greeted by a “triple witching” day. The day that the options expired coincided with the expiration of the futures contracts for the strength and the underlying indices. Just last Friday, the market value of these different transactions reached as much as 5.1 trillion. dollars. It is worth emphasizing that last week the S&P500 index ended with a new rebalancing. Two new companies Dell Technologies and Palantir were added to the index.
Europe: Market-friendly inflation results and problems in the industrial sector
European stock indices were little changed last week, with Germany’s DAX up 0.11%, the CAC 40 up 0.47% and the FTSE 100 down -0.52%.
The announced inflation indicators of the Eurozone did not disappoint investors. Annual inflation fell to 2.2% last month. this indicator recorded 2.6%. The monthly change in inflation was also lower than the market expected and reached 0.1%. Unlike the Eurozone, the United Kingdom could not enjoy falling inflation. It was the UK that recorded annual inflation at 2.2%, the same as last month. And the monthly change in inflation reached 0.3% growth, when back in August this indicator showed a fall of 0.2%.
Despite controlled inflation in Europe, lingering industrial problems are felt in Germany. One of the main car manufacturers, Mercedes Benz, announced cut profit forecasts for the second quarter of 2024. for half The company previously expected to see a profit margin of 10–11%, but last week lowered this figure to 7.5–8.5%. The lackluster forecasts sent the company’s share price down more than 6% on the Frankfurt Stock Exchange, and the already-challenged Porsche Holding GmbH reacted to the poor forecasts with both PAH3 and VOW3 shares falling more than 3%.
