Market Update

From the table provided, it's evident that markets predominantly ended the week on an upswing.
The US released a flurry of critical economic indicators this week.
The US CPI data, reflecting the recent uptick in energy prices, showcased a year-on-year increase of 3.7% for August 2023, surpassing the forecasts of economists. On the other hand, the core inflation, which strips out the more unpredictable elements such as energy and food, showed a slowdown to 4.3%, a drop from the 4.7% recorded in July 2023. The most recent hike by the Fed took place in July, adjusting rates by 0.25% to land between 5.25% and 5.50%—marking the 11th adjustment since March 2022.
From its pinnacle in the previous year's June, US inflation has been on a consistent descent. Coupled with indications of a more relaxed job market, there's a consensus that inflation could decline even further in the upcoming months. It remains to be seen whether such data will sway the Fed to halt any forthcoming rate boosts. However, clarity is on the horizon with the Fed's meeting slated for 19th September.
Across the Atlantic, the European Central Bank (ECB) convened on 14th September, primarily to discuss interest rate adjustments. The bank took the decisive step of lifting its interest rate to an unprecedented 4% (for the key deposit facility rate). This move was bold, especially amidst worries that increased borrowing costs might further decelerate the economic momentum. President Christine Lagarde underscored that despite the recent moderation in inflation, the bank's focus remains on driving it even lower. She emphasized the ECB's commitment to combating inflation, even if consumers might feel the pinch from escalating credit expenses.
Market analysts interpreted the ECB's discussions as somewhat telling. They inferred from the minutes that the bank might be leaning towards halting any further rate increases for the foreseeable future. The central theme appeared to pivot from 'rate hikes' to a preference for sustaining elevated rates over an extended period to counteract inflationary pressures.
Meanwhile, in China, data showcased an economy finding its footing. For August 2023, both industrial production and retail sales outperformed expectations. Industrial output grew by 4.5% on an annual basis, surpassing the anticipated 3.9% and marking an improvement from July's 3.7%. This uptick is attributable to Beijing's recent initiatives aimed at propelling the economic rebound, marking it as the steepest growth in industrial output since April.