Take Two: Fed indicates high rates for some time yet; Eurozone inflation accelerates
- 08 January 2024 (3 min read)
What do you need to know?
The Federal Reserve may ease monetary policy this year but warned interest rates could remain high “for some time” until inflation falls further. Minutes from its December meeting showed policymakers agreed the path of monetary policy “will depend on how the economy evolves”, with future rate hikes not ruled out. While market reaction to the minutes was muted, 2023 delivered better-than-expected returns; the MSCI World NR Index rose 24%, while the S&P 500 was up 26% including dividends, and the tech-heavy Nasdaq achieved 45%.1
Around the world
Eurozone annual inflation rose 2.9% in December, up from 2.4% in November; however, core inflation – excluding energy, food, alcohol and tobacco – fell to 3.4% from 3.6%, according to an official flash estimate. In addition, Eurozone manufacturing activity contracted in December for the 18th consecutive month. The final manufacturing Purchasing Managers’ Index (PMI) confirmed a slight rise to 44.4 in December from 44.2 in November – below 50 signifies a contraction. The bloc’s composite PMI remained unchanged in December at 47.6, signalling a moderate but consistent decline in Eurozone business activity.
- SW4gVVMgZG9sbGFyIHRlcm1zLiBTb3VyY2U6IEZhY3RTZXQsIGRhdGEgYXMgb2YgMjkgRGVjZW1iZXIgMjAyMy4=
Figure in focus: Two billion
Globally, 2024 will be a politically-charged 12 months, with more than two billion people set to head to the polls – most by virtue of India’s elections during April and May. However, emerging markets overall will collectively hold 19 elections this year, with some of the most important contests taking place in Taiwan, South Africa and Mexico. The UK is also very likely to see a general election later in 2024 but the most consequential for the wider world is likely to be the US Presidential race on 5 November.
Words of wisdom
Floating turbine – An offshore wind turbine mounted on a floating structure enabling the turbine to generate electricity in depths of water that fixed turbines are not able to reach. Industry officials believe floating turbines could account for over half the UK’s target for offshore wind power generation by 2050 – notably, the amount of UK electricity generated by fossil fuels fell by 22% year on year in 2023, according to climate policy specialist Carbon Brief. Floating turbines may be a potential key technology in the green transition to help replace fossil fuels with renewable energy.
What’s coming up?
On Monday, a spate of Eurozone surveys will be published covering December, including the bloc’s Economic and Industrial Sentiment and Consumer Confidence indices. On Tuesday, the Eurozone also publishes its unemployment rate for November. On Thursday, the US releases its inflation figures for December, with China following up with its own numbers on Friday. In addition, the UK reports November GDP growth on Friday.
Related articles
View all articles
Letter from China
- by
- 15 April 2024 (10 min read)
Saved by Supply
- by
- 08 April 2024 (7 min read)
March Op-Ed - Direction of travel confirmed
- by ,
- 27 March 2024 (7 min read)
Disclaimer
This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.
All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone.
Some of the services listed on this Website may not be available for offer to retail investors.
This Website has not been reviewed by the SFC. © 2023 AXA Investment Managers. All rights reserved.