Investment Institute
Weekly Market Update

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


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. 

Robotech Stories: Identify opportunities with surgical precision
Macroeconomics

Robotech Stories: Identify opportunities with surgical precision

  • by AXA Investment Managers
  • 01 October 2024 (3 min read)
Investment Institute
CIO Views: Interest rate cut hopes drive bond returns
Asset Class Views Viewpoint CIO

CIO Views: Interest rate cut hopes drive bond returns

  • by Chris Iggo, Alessandro Tentori, and others
  • 30 September 2024 (3 min read)
Investment Institute
Take Two: OECD lifts 2024 growth forecast; China announces major economic stimulus
Macroeconomics Weekly Market Update

Take Two: OECD lifts 2024 growth forecast; China announces major economic stimulus

  • by AXA Investment Managers
  • 30 September 2024 (3 min read)
Investment Institute
CIO Views: Fixed income performance driven by lower rate expectations
Asset Class Views Viewpoint CIO

CIO Views: Fixed income performance driven by lower rate expectations

  • by Chris Iggo, Alessandro Tentori, and others
  • 30 September 2024 (3 min read)
Investment Institute
China reaction: Coordinated fiscal supports on the way
Macroeconomics Market Alerts

China reaction: Coordinated fiscal supports on the way

  • by Yingrui Wang
  • 26 September 2024 (3 min read)
Investment Institute

    Disclaimer

    This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) 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 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. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.

    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 forecasts made will come to pass. 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. 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.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested. Past performance is not necessarily indicative of future performance.

    Some of the Services and/or products may not be available for offer to retail investors.

    This publication has not been reviewed by the Monetary Authority of Singapore.