Daily Market Commentary 25th September 2023

US equity markets closed out a very gloomy trading week, which was dominated by Central Banks and their monetary policy decisions. The Fed left rates unchanged but issued a very ‘hawkish tone’ in their narrative, with the prospect of further rate rises this year. The Bank of England surprised many, following the Fed, as the latest inflation numbers showed signs of cooling. The Swedish and Norwegian Central banks both recognised renewed inflationary pressures, and raised rates. The coming week will be focused on inflation and growth, with CPI readings across Europe, and the US will release the latest PCE inflation reading. The surge in Oil prices across the globe, has begun to impact energy prices and feed through into inflation numbers. Saudi Arabia and Russia had made cuts to supply of more than a million barrels/day, but Russia just imposed a total ban on Diesel exports. The energy markets are now the source of much concern and this will flow through to heating and transport costs across the globe. The rising US Bond yields have fed through to the currencies, with the EUR falling back to 1.0620, while the GBP has crashed to 1.2240.

Commodity currencies have also suffered the volatility, with the NZD slipping below 0.5900, but recovered Friday to trade back up to 0.5950. The AUD also slipped below 0.6400 but pushed back in late trade Friday. Inflation readings and interest rates will continue to dominate markets in the coming week. The all-important US PCE inflation reading next week is closely monitored by the Federal Reserve.