Central Banks Eye June Rate Cut

European equities outperformed most other developed markets as European Central Bank (ECB) president Christine Lagarde’s comments gave rise to the possibility of a summer rate cut on the continent ahead of the US Federal Reserve.

European investors also welcomed the latest Purchasing Managers Index (PMI) data showing the services sector expanding for the first time since last summer. ECB president Lagarde suggested the Bank ECB is more likely to cut rates in June than April with more data available when they meet in the summer, about a week before the Federal Reserve meets. The MSCI Europe ex UK index enjoyed a +1.44% weekly return in local currency.

The UK’s mid-cap FTSE 250 index posted a similar return of +1.28% in a week that saw Chancellor of the Exchequer Jeremy Hunt, in his last Spring Budget before a general election, unveil a reduction in national insurance rates, more beneficial child benefit rules, and the concept of a British ISA. The FTSE 100 slipped -0.3% in contrast to its mid-cap peer.

Elsewhere, US stocks lost ground, the tech heavy Nasdaq in particular gave back -1.17% in local Dollar terms. Recent upticks in inflation data did not cause US Fed chair Jerome Powell to alter his view that it will likely be appropriate to cut interest rates later this year, speaking at his semi-annual testimony to Congress. Nonfarm payrolls rose in February, however this was in the context of some substantial downward revisions to the past two months.

In commodities, gold closed the week at a record high $2,178 an ounce after eight days of consecutive gains. The price of a barrel of West Texas Intermediate crude oil meanwhile declined $2 to a shade under $78.

Week Ahead

Day	Country	Measure	Period	Forecast	Previous
Monday	-	-	-	-	-
Tuesday	UK	Average Earnings Change YoY	January	6.20%	6.20%
	UK	Unemployment Rate	January	3.80%	3.80%
	US	CPI Inflation YoY	February	3.10%	3.10%
Wednesday	Europe	Industrial Production YoY	January	-2.80%	-1.20%
	UK	GDP Estimate QoQ (Revised)	Q4'23	-0.10%	-0.30%
	UK	Industrial Production YoY	January	-	-0.20%
Thursday	US	PPI Inflation YoY	February	1.10%	0.90%
	US	Retail Sales MoM	February	0.50%	-0.80%
Friday	-	-	-	-	-

Source: Refinitiv Workspace, 11/03/24

Past performance is not indicative of future performance.

The value of an investment may fall as well as rise. You may get back less than the amount invested.

The value of investments may fall as well as rise purely on account of exchange rate fluctuations.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2024. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group
does not promote, sponsor or endorse the content of this communication.

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.

Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.

Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.

SJP Approved 11/03/2024