In today's market update, we bring you the latest developments from the global trading markets.
Asian stocks are on track for their best run since January. Meanwhile, in the UK, store prices fell for the first time in two years, providing potential relief from the cost-of-living crisis.
Asian Stocks on Track for Best Run Since January:
Asian stocks continue to show strength as shares in Japan, Australia, and South Korea rose, signalling a positive streak. However, China's stock market experienced fluctuations amid data showing a slowdown in home sales and manufacturing in the country. Mainland China's Caixin PMI figures revealed that factory activity contracted in July, missing economists' estimates for a small expansion. Additionally, July home sales data for China indicated the biggest drop in a year, reflecting challenges in the property sector.
UK Store Prices and Inflation:
In the UK, store prices fell for the first time in two years, providing a potential relief from the cost-of-living crisis. The British Retail Consortium reported that shop prices were 0.1% lower in July compared to June, and annual inflation dropped to 7.6% in July, down from 8.4% in June. Food price increases decelerated for the third consecutive month to 13.4%, the lowest rate since December. Cheaper cooking oils, fats, fish, and breakfast cereals contributed to this decline, and retailers in the clothing and footwear sector slashed prices due to adverse weather conditions. Despite this relief for households, the impact of rising interest rates continues to affect mortgage costs for many homeowners. The Bank of England is expected to decide whether to hike rates again from the current level of 5%.
European and US Market Outlook:
In Europe, the euro-area economy returned to growth, while underlying inflation pressures persist, providing early arguments for the European Central Bank to raise interest rates again. In the US, data indicating tamed inflation has boosted optimism for a soft landing as the Federal Reserve approaches the end of its monetary-tightening cycle. Futures contracts for US stocks were mildly positive, and both the S&P 500 and Nasdaq 100 extended their run of monthly gains. The buoyant mood on Wall Street has led to a retreat among bearish institutional investors, economists, and strategists as market returns continue to challenge expectations.
Corporate News: For best day trading platform UK
Corporate developments have played a significant role in the market's performance. Exxon Mobil Corp.'s climb came as it was reported to be in talks with Tesla Inc., Ford Motor Co., and other automakers about supplying them with lithium.
SoFi Technologies Inc. surged 20% after the online bank raised its revenue guidance.
Yellow Corp. experienced a significant increase in its stock value after announcing plans to file for bankruptcy, impacting the less-than-truckload shipments sector.
Central Bank Developments:
The Bank of Japan announced an unscheduled bond-purchase operation to tamp down rates following changes to its yield curve control program. In the US, the Federal Reserve survey of lending officers showed that financial institutions reported tighter standards and continued weak demand for loans in the second quarter, extending a trend that began before recent stresses in the banking sector emerged.
Fed Bank of Chicago President Austan Goolsbee expressed that slower inflation is "fabulous news," but he hasn't yet decided on whether to support pausing rate hikes at the next policy meeting. Meanwhile, Minneapolis counterpart Neel Kashkari mentioned that the inflation outlook is "quite positive," although aggressive tightening by the central bank may result in some job losses and slower growth.
Word of Caution and Seasonal Trends:
Some market experts caution investors to be careful about extrapolating this year's stock market performance. Matt Maley at Miller Tabak + Co. advises having a backup plan for when the "fear of missing out" fades or signs of weakness emerge.
Historically, August has been a more muted month for the stock market, but based on previous streaks like the current five-month winning run, the S&P 500 has extended gains into a sixth month nearly 80% of the time.
As we head into August, it's crucial for investors to remain vigilant and have contingency plans in place. While the stock market has been performing well, potential risks and developments in the global economy should not be overlooked. Staying informed and adaptable will be key in navigating the market's twists and turns.
As the trading markets remain dynamic, staying informed about the latest developments and market trends is vital for traders seeking profitable opportunities. Whether in the UK or globally, being aware of market movements and considering expert insights can help investors make well-informed decisions. Remember to stay disciplined, manage risk prudently, and continuously learn and adapt in pursuit of your trading goals. Happy trading!
Trading and investing carry financial risks and could lead to partial or complete loss of funds. Invest only what you can afford to lose and seek advice from an independent financial advisor if you have doubts about your investment choices.