Video

Market Moves - FTSE 250 reacts to Autumn Statement

Market Moves provides a round-up of the market movements and the global investment outlook for the week beginning 27th November 2023.

| 4 min watch

The FTSE 250 was down 50 basis points on the week and really that was a result of a response to the Autumn Statement and the impact that might have on inflation.

Multi-asset Strategist and Portfolio Manager, Benedict Totman reflects on market movements from the past week, provides an outlook on the economy more generally, and considers the implications of what is unfolding.

Transcript:

Welcome back to this week's episode of Market Moves.

My name is Erica White, alongside multi-asset strategist and portfolio manager, Benedict Totman here to break down the market moving events of the last week, namely Black Friday, which saw a boost in shoppers in comparison to last year. Meanwhile, gold prices are creeping close to all-time highs. If that's not a sign of the times, I do not know what is.

What has been the impact on markets? Well, that is what Benny is here for. Benny, how's it going? Thanks much for being here.

Thanks for having me. Good to be back.

What can you tell us?

So we, we had a number of things that were moving markets. First of all, we had the autumn statement by the Chancellor in the UK, the single biggest thing being the announced decrease of national insurance. We also had the release of the FOMC minutes over in the US, the most recent meeting of the Federal Reserve. On top of that, we had a number of global purchasing manager indices release to give us a bit of an update on what's going on in the global economy in terms of services and manufacturing.

Most of those broadly came midline although we did see the UK surprise to the upside on the services PMI.

And finally we had a number of earnings releases. As you know, the global earnings calendar sort of draws to an end for the year, the most important, those being NVidia, the dialling of this year's tech rally.

Although it did beat estimates, we did see a bit of a slightly negative price performance on the week. Perhaps the expectations of market participants were somewhat higher than those on the sell side but also we had the US China trade relations coming into focus, and the impact of the sales of their, of their chips in China.

Lots of pieces of information to take in there, what are the impacts of all those moves?

Yeah, so a lot going on last week but really the market tended to look through quite a lot of it. We saw equity in indices continue to grind higher on the week. The MSCL world was up 1%, as was the p 500, the stock 600 up 90 basis points on the week as well.

So, continuing that momentum, momentum that we've seen since the beginning of November, market participants continue to focus on the prospect of central banks finally finishing their rate hikes and actually looking forward to decreasing their base rates and conquering inflation.

Where we did see quite a big impact though, was in the UK, a bit more of a negative performance.

The FTSE 250 was down 50 basis points on the week and really that was a result of a response to the autumn statement and the impact that might have on inflation.

So, with a fall in the tax burden in the shorter term, that's a positive for consumers, that allows to spend more and market participants reacted to increased market interest rates.

So, across the UK gilt curve, we saw yields sell off 15 to 20 basis points and that obviously had a follow through negative onto UK equity prices.

Looking ahead, what could all this mean? And Benny, I know that you do not have a crystal ball.

Looking forward, what it means is that the market's continually beginning to price in what we’re calling a goldilocks situation. Not too hot, not too cold. Not really in the UK where I've, I've spoken about slight negative price movement in certain assets over the week.

There is perhaps a little bit more of a realistic expectation around central banks there, but certainly if we look at the US what market participants are pricing in from a growth perspective, an inflation perspective, as well as a central bank policy perspective, you know, the data has to be just right in order for all of those things to play out.

So, if we don't get that scenario, we could begin to see a bit of, a bit of increased volatility as some of that market pricing has to get moved out.

Goldilocks, love that so much. Benny, thank you so much for all your
expertise here today. That was fabulous.

Thanks for having me.

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Market Moves - FTSE 250 reacts to Autumn Statement

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