Investment Institute
Weekly Market Update

Take Two: Eurozone avoids recession; Fed and BoE keep interest rates on hold

  • 05 February 2024 (3 min read)

What do you need to know?

The Eurozone narrowly avoided recession in the final three months of 2023 as the economy recorded flat growth on a quarterly basis, according to a flash estimate. It had contracted 0.1% in the previous quarter. Over the 12-month period, GDP rose just 0.5% as the bloc’s economy struggled to gain momentum amid a backdrop of high inflation and interest rates. Meanwhile Eurozone annual inflation edged down to 2.8% in January from 2.9% in December, partly thanks to a fall in energy prices. Core inflation, excluding energy, food, alcohol and tobacco, lowered to 3.3% from 3.4%, though the decline was less than the market had been expecting.


Around the world

The US Federal Reserve (Fed) kept interest rates at their 23-year high of between 5.25% and 5.50% last week, as Fed Chair Jerome Powell pushed back against expectations of an early rate cut, saying he didn’t “think it’s likely” that policy easing would begin as soon as March. The committee’s official statement noted that it would not be appropriate to cut rates until it had “greater confidence that inflation is moving sustainably toward 2%”. Meanwhile Bank of England policymakers held rates steady at 5.25% but one outlier called for a cut to 5.0% while two voted to raise rates to 5.5%.

Figure in focus: $1.8trn

Global clean energy spending surged 17% to a record $1.8trn last year, according to BloombergNEF, including renewable energy installations, electric vehicles (EVs) and hydrogen production systems. However, more than twice this amount is needed to reach net-zero targets by 2050, it said. EVs overtook renewable energy as the biggest area of focus, accounting for $634bn of spending, a 36% increase from the year before. China was the biggest market for clean energy spending with $676bn last year, up 6%. However, investments in the US, UK and Europe grew faster, by at least 22%, boosted by policy measures such as the US Inflation Reduction Act.


Words of wisdom

Brexit 2.0: New UK trade rules introduced last Wednesday, four years after the UK left the European Union (EU). Delayed five times, to allow businesses to prepare for the changes, so-called Brexit 2.0 represents the last phase of the UK’s exit from the trading bloc. The legislation imposes strict requirements on businesses importing food and plants from the EU. While the rules went live on 31 January, border checks will not be implemented for three months. The UK government has acknowledged these rules will lead to higher food prices with a 0.2 percentage point rise over three years.

What’s coming up?

Monday sees several countries including Japan, China, India as well as the Eurozone, UK and US issue final Purchasing Managers’ Indices for January. The Reserve Bank of Australia holds its first monetary policy meeting of 2024 on Tuesday – at its final meeting of 2023 it maintained its cash rate at 4.35%. The US updates on household debt on Tuesday while on Thursday, China publishes its latest inflation numbers and the Reserve Bank of India meets to decide on interest rates. Canada issues its employment figures for January on Friday. 

US reaction: CPI notches 2nd confidence builder
Macroeconomics Market Alerts

US reaction: CPI notches 2nd confidence builder

  • by David Page
  • 12 June 2024 (3 min read)
Investment Institute
Take Two: European Central Bank and Bank of Canada cut interest rates
Macroeconomics Weekly Market Update

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

  • by AXA Investment Managers
  • 10 June 2024 (3 min read)
Investment Institute
Fast-Forwarding
Macroeconomics

Fast-Forwarding

  • by Gilles Moëc
  • 10 June 2024 (10 min read)
Investment Institute
US reaction: US payrolls in ground hog day surprise
Macroeconomics Market Alerts

US reaction: US payrolls in ground hog day surprise

  • by David Page
  • 07 June 2024 (3 min read)
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.