The Davy Digest - 9th September 2024

US equities finished last week lower as growth concerns re-emerged in the US. The ISM US manufacturing PMI came in at 47.2, well below the 50 mark that indicates expansion. US jobs data on Friday showed that employers added 142,000 jobs in August, below consensus estimates of around 160,000, with the unemployment rate ticking lower to 4.2% from 4.3%. US job vacancies fell to their lowest level in more than three years in July, weaker than expected. The growth concerns prompted investors to sell highly valued tech stocks, with names such as Nvidia selling off as much as 9.5% on Tuesday. In Europe, it was a similar story, as tech stocks like ASML led the main European indices lower. UK equities sold off for the week. On a positive note, UK retail sales rose more than expected in August, up 1% year-over-year. Chinese onshore equities outperformed for the week. The Caixin Manufacturing PMI showed that Chinese manufacturing activity returned to growth in August. Commodities such as oil and copper showed weakness, reflecting investors’ concerns about global growth.

Last week's highlights

	ISM Manufacturing & Services PMI (03/09 & 05/09) – Manufacturing at 47.2 vs 47.5 expected, suggesting subdued factory activity. Services came in above forecasts at 51.5 in August.  Nonfarm Payrolls (06/09) – 142,000 jobs added vs 160,000 forecast.
	Eurozone Retail Sales (05/09) - Eurozone retail sales rose by 0.1% in July, recovering from a June decline. The increase was in line with expectations.
	BRC Retail Sales – UK retail sales rose 1% YoY in August, up from 0.5% in July. Warm weather had a positively impacted spending on summer clothing and food.
	Caixin Manufacturing PMI (09/09) – Rose to 50.4 in August from 49.8 in July, showing China’s manufacturing activity returned to growth in August.  Caixin Services PMI (09/09) – Fell to 51.6 in August from 52.1 in July, but still above the 50 mark that indicates expansion.

Looking ahead to this week, it promises to be a busy week in markets. In the US, the first presidential debate between Kamala Harris and Donald Trump will take place on Tuesday night. Betting markets are currently pricing in a slight advantage for Trump in the race for the White House. On Wednesday, US inflation figures for August will be released, markets are currently undecided on whether the Fed will cut rates by 25 bps or 50 bps in September. In Europe, the European Central Bank will meet on Thursday with markets expecting interest rates to be cut by 25bps. In the UK, unemployment figures will be released on Tuesday, recent surveys have shown the resilience in the UK labour market with wage growth still stronger than the Bank of England would like. Finally, in China, inflation numbers for August were released earlier this morning, coming in below expectations at 0.6% year-over-year.

What's on the radar

	Presidential debate (10/09) US inflation (CPI) (11/09) US Producer Price Index (12/09)
	ECB meeting (12/09)
	UK unemployment (10/09)
	China Inflation (CPI) (09/09)

Chart of the moment

Time in the market beats market timing

Please see larger version of the chart here.

Source: Bloomberg as of 05/09/2024.   Global Equities: MSCI World (euro)  Global Bonds: JP Morgan Global Govt Bond Index (euro hedged)    Returns shown are total return in euro on a portfolio made up of 55% global equities and 45% global bonds.

• The chart shows the historical returns in euros experienced by an investor in a global balanced portfolio. 
• For example, if you invested in 2012 and stayed invested for 7 years, you would achieve a 7% annualised return. (circled in red on the chart)
• The chart conveys the importance of a long-term horizon for investors in balanced portfolios. 
• If you were unlucky enough to invest at the start of 2008, you would achieve a positive total return if you stayed invested for 3 years.