Weekly Market Update 20/09/2024
On Wednesday, the Federal Reserve cut interest rates by half a percentage point to a range of 4.75% to 5%, the central bank’s first cut in over four years. At the news conference following the decision, Fed chair Jay Powell said the move had been made to “maintain the strength of the economy and labour market”. The Fed also indicated more cuts would follow unless inflation remains sticky. US stocks gained immediately following the decision, but ultimately ended the day slightly lower. Stocks across Europe and Japan rallied on Thursday off the back of the news.
In further central bank news, the Bank of England held interest rates at their meeting on Thursday (at 5%) as inflation remained steady in August. The eight-to-one decision saw one policy member vote for a quarter of a percentage point cut, indicating that we are likely to see another cut to rates later this year. Sterling rose briefly, but ended the day just 0.3% up at $1.3251.
UK consumer confidence fell in September, as consumers anticipate a “painful” Budget. The GfK consumer confidence index (a measure of how people view personal finances and the broader economy) fell seven points to -20, back to its January level, negating all progress made so far this year. This is the largest month-on-month fall since October last year when mortgage rates were near to their peak.
Andrea Wood, Chartered MCSI
Investment Manager
