- The week started off on a down note after data indicated a sharp slowdown in China. Chinese industrial production and retail sales figures both missed forecasts. Also weighing on sentiment were concerns over rising global coronavirus cases and the potential geopolitical ramifications arising from the collapse of the government in Afghanistan.
- UK unemployment rate fell to 4.7% during the second quarter, just below expectations of 4.8%, and the number of employees in UK jobs was up by 182,000 in July.
- On Wednesday, data from the Office for National Statistics (ONS) showed that UK Consumer price inflation slowed to 2% (year-on-year) in July which is the Bank of England target. The fall from 2.5% in June was more than expected and is the first downtick since February.
- Data also showed that UK Retail Sales fell by 2.5% from a month earlier. Expectations were for a small increase.
- Stocks rallied back a little on Tuesday but fell sharply on Thursday after minutes from the US Fed’s July meeting were released, see US Market Chart.
- Our Breadth indicator stayed positive but our Momentum Indicator ticked lower again.
- Events in Afghanistan and concerns over growing coronavirus numbers meant the US stock-market lost ground early in the week. It was warned that the US new Covid infection rate could climb to 200,000 a day.
- On Thursday the market opened sharply lower (but recovered) after minutes from the US Federal Reserve’s July meeting indicated that a reduction in quantitative easing could start as early as this year. The FOMC members discussed the possible tapering as the US economy is gaining momentum but the Fed have stated that cutting back on the bond purchasing program does not necessarily mean an imminent increase in interest rates.
- Investors are now expecting an announcement in September but more information could be forthcoming at this coming week’s Jackson Hole summit.
- Our Breadth Indicator stayed negative and our Momentum Indicator ticked lower again.
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