Daily Market Commentary 15th September 2023

The ECB raised rates 25 basis points, surprising many, but the impact was minimal due to the dovish narrative. The ECB raised rates but signalled this may be the end of rate rises, hitting ‘peak interest rates. This allowed equity markets to surge and recent bond yields rises to settle. The recessionary economic conditions within the Eurozone, did not need further interest rate rises, but renewed inflationary pressures required remedial action. The US equity market also rallied strongly, despite higher-than-expected PPI numbers, assuming the Fed has hit the ‘pause button’ on rate rises. Retail Sales in the US jumped more than expected and markets lapped up the sliver of good news. The ECB rate rise had the opposite effect on the currency, which fell to 1.0630, while the GBP slumped to 1.2400.

The stronger reserve pushed the commodity currencies, with the NZD testing the downside of 0.5900, while the AUD heads back towards 0.6400. Australian Unemployment was stable, holding around 3.7%, although it was a rise in part-time jobs that supported the overall rate. Local markets were supported by the Chinese Central Bank cutting rates by 25 basis points and adding much needed stimulus to the flagging economy.