Market Commentary 21st October 2024 – from Will Binks

Inflation data showed that consumer prices rose by 1.7% year-on-year in September, with headline inflation slowing from 2.2% the month before. Inflation is now below the Bank of England’s target of 2% and at the lowest rate since April 2021. Core inflation, which excludes energy and food prices and has proven to be quite sticky, slowed more than economists predicted.

Unemployment in the UK fell to 4% between June and August, down from 4.1% in the previous three months, with the UK economy adding 373,000 new jobs. This is the highest increase on record and also shows the number of people with second jobs has increased to 3.8%.

The European Central Bank (ECB) voted to cut interest rates by a further 0.25% last week, with the headline rate now at 3.25%. The ECB’s President, Christine Lagarde, said that they were “well on track” to bring inflation under control.

France published updated inflation figures, with consumer prices rising by 1.1% year-on-year in September, driven by a sharp drop in energy prices. The ZEW, a major economic research institute in Germany, released data on their Economic Sentiment for Germany survey. The data showed that sentiment from banks, insurance companies and financial departments rebounded strongly this month.

Retail sales in the US increased by 0.4% in the month to September 2024, well above the 0.1% increase in August. Sales in miscellaneous store retailers recorded the biggest increase, followed by clothing.

Unemployment claims dropped by 19,000 in the week ending October 12, marking the largest decrease in three months. The previous month’s figures did surge due to disruptions from Hurricanes Helene and Milton, but the data remains well above averages, suggesting a weaker US labour market.

The annual inflation rate in Japan slowed to 2.5% year-on-year in September, down from 3.0% the previous month and the lowest reading since April 2024.  The Japanese Yen has fallen sharply in value as traders reduce bets on further interest rate rises being implemented by the Bank of Japan.

China’s economy expanded by 4.6% year-on-year in the 3^rd quarter of 2024, the slowest annual growth rate since the 1^st quarter of 2023.  The slower-than-expected growth comes despite Chinese stimulus measures as property markets remain weak and trade frictions with the West rise.

GBP / EUR – Current 1.2007 Previous 1.1947

The Pound moved slightly lower versus the US Dollar (-0.15%), whilst the Euro fell generally against global currencies, resulting in the Pound rising by 0.50% versus the Eurozone currency.