Weekly Market Recap
Week in review
- 23/09 – U.S., EU & JP – Flash manufacturing PMI
- 24/09 – DE – Ifo Survey
- 25/09 – U.S. – New Home Sales
- 27/09 – U.S. – PCE Inflation & Durable orders
Thought of the week
As markets had expected, the U.S. Federal Reserve cut its benchmark rate by 25bps to a range of 1.75% to 2% last week, citing weaknesses in exports and investments. Updated quarterly forecasts showed an uptick in GDP and unemployment rate by 0.1% for 2019, while that of inflation remained the same. Despite terming the July cut to be a “mid-cycle adjustment”, the latest move and reasonably dovish FOMC statement hint at a relatively open stance for further reductions. From an investment perspective, lower interest rates should be supportive for risk assets in the short term, though softer growth and geopolitical uncertainties remain to be headwinds. Lower U.S. rates will also allow greater scope for Asian central banks to ease further, as the region continues to be embattled by slowing trade activity. In the longer run, greater allocation towards low-volatility fixed income and high dividend defensive stocks should help manage volatility that may arise from policy uncertainties and a turbulent growth outlook.
Chart of the week
U.S. Federal Reserve cuts its benchmark rate
FOMC and market expectations for the fed fund rate
JPMorgan China Income Fund
To provide investors with income and long-term capital growth by investing at least 70% of its non-cash assets in (a) equity securities of companies which are based in, listed on any stock exchange of, or operate principally in the PRC and that the Investment Manager expects to pay dividends and (b) Chinese debt securities issued and/or distributed in or outside the PRC.