Current market commentary
Since April, the S&P 500 has been on an almost continuous upward trajectory. It has gained around 34% from its low point to its current high, without experiencing any significant setbacks of more than 3% since the end of April. The market is currently navigating what is usually the weakest seasonal period of the year, but so far has shown only moderate fluctuations and remains close to new record highs. Precious metals have even outperformed this trend: gold and silver have risen by more than 40% since the beginning of the year, driven by growing concerns about rising global government debt. Copper and oil have also risen recently. This exacerbates inflation risks, presenting the US Federal Reserve with additional challenges when it comes to further interest rate cuts. Fed Chairman Powell therefore does not consider further easing to be a foregone conclusion. Although the Fed cut its key interest rate by 0.25 percentage points in September and has signalled two further cuts before the end of the year, Powell remains cautious and emphasises that future decisions will depend on the data and that a series of automatic interest rate cuts is therefore not to be expected.
Short-term outlook
After the US Federal Reserve cut interest rates on 17 September for the first time in nine months, investors are now focusing more closely on hard economic data. Developments on the US labour market and inflation remain the key issues. In addition, the reporting season beginning in mid-October is likely to provide new insights into the resilience of companies to US tariffs.
Tomorrow, in addition to the purchasing managers' indices for manufacturing and services from China (September), consumer prices from Germany (September) and consumer confidence from the US (September) will also be published. On Wednesday, the purchasing managers' indices for the eurozone (September) and the ISM index for manufacturing in the US (September) will follow. On Friday, the important monthly labour market data and the ISM index for services (Sep) will be released in the US. Next week, the FOMC minutes and the preliminary Michigan Consumer Index (Oct) will follow.
International equities outperform US equities in a single currency
- US equities are trading close to their highs in dollar terms. However, due to the depreciation of the dollar, euro investors are only breaking even for the year.
- Instead, euro investors benefited more from international equities, most recently from emerging markets such as China and Latin America.
- The latter were supported primarily by the weaker dollar, stimulus packages, low positioning and interest rate cuts.
