Weekly Market Update

18/11/2019

Last week saw mixed returns for equity markets, with the US at record highs while emerging market equities drifting lower. The UK was also rather weak driven by election concerns and upward moves from the currency. Interestingly, investors are beginning to put cash back to work reflecting expectations of a rebound in economic activity which has previously been weak.

The UK escaped a recession, but annual growth is now the slowest since 2010. UK GDP grew by 0.3 per cent quarter-on-quarter between July and September, marginally below expectations. UK inflation also fell to its lowest level in almost 3 years with CPI at 1.5 per cent year-on-year in October, down from 1.7 per cent in September.

UK wage growth slowed down in the three months to September. Average earnings increased by 3.6%, compared with 3.8% growth in the previous month, but this still represented real inflation-adjusted growth.

The number of people employed did fall at its fastest rate in four years. However, the labour market is still tight, with an unemployment rate at a near-record low of 3.8 per cent. The labour market has been one of the most resilient parts of the economy this year with employment rates reaching a record high in the summer and real average earnings accelerating at the fastest pace since 2015.

Germany narrowly escaped a technical recession, as consumers and the Government increased spending enough to stave off another fall in GDP. Third-quarter growth was 0.1 per cent.

US retail sales recovered by more than expected in October, lifting from a seven month-low and reflecting the continued resilience of American shoppers this year. Overall retail sales rose 0.3 per cent last month, marking an improvement from September’s unexpected 0.3 per cent contraction, which was the weakest level of spending since February.

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