Market Updates

After three weeks of positive performance, the key equity indices ended flat to marginally higher in the US and fell in Europe last week for two reasons: First, escalating Middle East tensions sent the price of risky assets lower while pushing oil prices higher. Second, better-than-expected jobs and services data out of the US led markets to no longer expect a big rate cut in November.

The escalation in the Middle East took a new turn yesterday as Iran fired a barrage of ballistic missiles at Israel in retaliation for the start of ground operations in Lebanon. At the time of writing, it’s too early to tell whether the conflict could broaden to the wider region and/or involve the US – where things are further complicated by the presidential election in November.

Last week, China unveiled a surprise package of stimulus measures to boost its economy and stock market. The People’s Bank of China (PBoC) cut interest rates, lowered banks’ reserve requirement ratios and relaxed mortgage policies.

Last week, the US Federal Reserve (Fed) decided to cut interest rates by half a percentage point, or 50 basis points (bps), bringing the Fed funds rate in the 4.75-5.00% range. Typically, central banks tend to move in increment of 25 bps.

The weekend saw another attempted shooting of Donald Trump. While any market implication remains unclear at the time of writing, along with whether and to what extent this might shift voter intentions, this could put the US election on 5 November on investors’ radars even more.

Artificial Intelligence (AI) has been one the biggest market stories over the past couple of years. At the centre of it all is Nvidia, the California-based company that up until a few years ago was mostly known for its graphic cards used in the video game industry.