SPW MarketWatch: September 2024
- Investment Specialists, Schroders Personal Wealth
- 04 October 2024
- 5 mins reading time
Source: FactSet, 3 October 2024. Figures are monthly price returns in local currencies for September 2024.
UK
Inflation remained stable at 2.2% in the 12 months to August, slightly above the Bank of England’s (BoE) 2% target (1). Despite speculation that this would lead to a rate cut, the BoE maintained its base rate at 5%, benefiting savers but increasing costs for borrowers. Economists expect a rate cut before the end of the year, with some predicting a fall to 3% over the next 12 months (2).
GDP data showed the UK economy grew by 0.5% in the three months to July 2024, following a plateau in June (3). However, the Office for Budget Responsibility (OBR) warned of long-term pressures such as an ageing population, climate change, and rising geopolitical tensions.
Europe
Eurozone inflation fell to 2.2% in the 12 months to August 2024 (4), prompting the European Central Bank to cut interest rates for the second time this year. The Paris Olympics provided a short-term boost to the eurozone economy (5). However, as the Olympics' impact faded, additional data indicated the eurozone economy shrank for the first time in seven months in September.
US
Inflation in the US fell to 2.5% in August 2024, the lowest since February 2021, leading the Federal Reserve to cut its base interest rate from 5.5% to 5% (6). This announcement caused the S&P 500 to jump 1.5% on 19 September. However, the manufacturing sector continued to struggle, contracting for the fifth consecutive month in August, leading to global market volatility.
The trade deficit increased by $5.6 billion in July to $103.1 billion (7).
Meanwhile, OpenAI, the company behind ChatGPT, announced talks to raise $6.5 billion from investors, valuing the company at $150 billion, making it one of the world's most valuable start-ups (8).
As we move into October we turn our attention towards Chancellor Rachel Reeves’ first budget. There is a lot of speculation as to what could be included in her announcements with media attention so far focusing on Capital Gains Tax, Inheritance Tax and Pensions. We will continue to monitor the situation and update our clients as we have further news on the budget.
If you are not currently an SPW client and are concerned about the potential implications of possible tax changes, then you may want to speak with a financial adviser, who could help you understand and navigate any changes announced.
Sources:
(1) Inflation and the 2% target | Bank of England
(2) When will UK interest rates fall further? | MoneyWeek
(3) GDP monthly estimate, UK - Office for National Statistics (ons.gov.uk)
(4) Annual inflation down to 2.2% in the euro area - Eurostat (europa.eu)
(6) US goes big with first interest rate cut in four years - BBC News
(7) July 2024 Trade Gap is $78.8 Billion | U.S. Bureau of Economic Analysis (BEA)
(8) OpenAI value surges to $157bn in funding deal - BBC News
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