Investment Institute
Weekly Market Update

Take Two: European Central Bank and Bank of Canada cut interest rates

  • 10 June 2024 (3 min read)

What do you need to know?

The European Central Bank (ECB) cut interest rates after nine months of holding steady, lowering its key benchmark rate by 25 basis points to 3.75%. It said the inflation outlook “has improved markedly” since last September when interest rates were at their peak. However, the ECB now expects inflation to average 2.5% in 2024 and 2.2% next year, up from its March forecast of 2.3% and 2.0% respectively. Elsewhere the Bank of Canada became the first of the G7 central banks to lower rates last week, by 25 basis points to 4.75% - its first cut in four years. 


Around the world

US business activity rose at its fastest pace in over two years in May, driven by a rise in new orders, the latest S&P Global Purchasing Managers’ Index (PMI) showed. The composite, which includes both manufacturing and services, rose sharply to 54.5 from 51.3 in April. The US manufacturing PMI rose to 51.3 in May from 50.0, returning to growth, while the services index rose to a one-year high of 54.8 from 51.3 – a reading above 50 indicates expansion. Meanwhile, China’s Caixin composite PMI rose to 54.1 in May from 52.8, on the back of the fastest growth in manufacturing output in nearly two years.

Figure in focus: 80%

There is an 80% likelihood the annual average global temperature will temporarily exceed 1.5°C above pre-industrial levels for at least one of the next five years, according to a new World Meteorological Organization (WMO) report. It said that short-term warming does not equate to a permanent breach of the Paris Agreement goal, but that more needs to be urgently done to cut greenhouse gas emissions. Separately, the International Energy Agency said that countries’ renewable energy plans will only meet 70% of what is needed to meet the COP28 goal of tripling renewable power by 2030.


Words of wisdom

NIFTY 50: India’s benchmark stock market, which consists of the country’s 50 largest listed companies. The NIFTY 50 Index closed at a record high last Monday, ahead of India’s general election result in anticipation of a decisive victory by Prime Minister Narendra Modi’s nationalist ruling Bharatiya Janata Party (BJP). However, stocks fell sharply on Tuesday before recovering some ground later after Modi secured a third five-year term but without an outright majority for the first time since he came to power a decade ago. The result will likely make it more difficult for the government to push through reforms, given the BJP’s weaker mandate.

What’s coming up?

Monday sees Japan issue a final estimate for first quarter economic growth. On Tuesday, the UK publishes its latest unemployment data and follows with April’s GDP numbers on Wednesday. The same day will see the US Federal Reserve convene to set interest rates while the US, China and Germany release their respective inflation updates for May. The Bank of Japan holds its own monetary policy meeting on Friday.

Mind the Crowds!
Macroeconomics

Mind the Crowds!

Investment Institute
Less drama, more prosperity
Asset Class Views Viewpoint CIO

Less drama, more prosperity

Investment Institute
UK General Elections: A one horse race to Number 10
Macroeconomics

UK General Elections: A one horse race to Number 10

  • by Gabriella Dickens
  • 21 June 2024 (10 min read)
Investment Institute
Uncertain Winds
Macroeconomics

Uncertain Winds

Investment Institute

    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.

    In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Back to top