TEAM Asset Management’s global weekly market review for week commencing 13th November. TEAM Asset Management is a Jersey-based independent asset management company of AIM-listed parent, TEAM plc (LON:TEAM).
Financial markets saw another good week with world equity indices gaining around 3%. After three consecutive monthly declines, November is well on its way to arresting this weakness. The technology dominated NASDAQ index is up more than 11% for the month, while Japan traded at a 33-year high on Monday.
The latest monthly US inflation data came in weaker than expected, which gave equity markets a good fillip as investors bet it will persuade the Federal Reserve to refrain from raising US interest rates any higher. Money market futures are now pricing in the Fed’s next move as a rate cut, as early as spring 2024, but may be misplaced as central banks keep telling us that interest rates will stay higher for longer.
It is worth remembering that current core US and UK inflation rates are respectively two and nearly three times the 2% target level, reinforcing the view that central banks will be cautious when it comes to making the first cut.
In corporate news, Bayer AG, the German pharmaceutical and agricultural company, announced that its leading experimental anti-thrombotic drug is being ditched due to lack of efficacy. If that was not enough, it has also lost another key courtroom battle over its ‘Roundup’ weedkiller. A US judge ordered the company to pay $1.56 billion to four plaintiffs in damages who had been diagnosed with cancer after using Roundup, adding to the thousands of farmers and gardeners making claims. Bayer shares fell 18% on Monday to their lowest level since 2009.
Artificial intelligence has been one of the key areas for stock market excitement this year and the announcement that Sam Altman, the Chief Executive Officer, and co-founder of OpenAI was dismissed by the Board over the weekend shocked markets.
Microsoft has moved quickly to appoint him, and fellow co-founder Greg Brockman, to head a new artificial intelligence research team. Price action in the market implies that Microsoft will be the winners in this saga. In the same sector, Nvidia will announce its latest results this week and a remarkable 470% increase in earnings is forecast. The stock has gained 245% so far this year.
Oil prices have been steadily falling for the last seven weeks as the global economy slows, reaching just $77.50 a barrel last Friday, a far cry from $94 at the end of September. In response, the Organisation for Petroleum Exporting Countries (OPEC), is intimating it could announce deeper production cuts at its 26 November meeting in Vienna. Any significant rise in oil prices could dampen investor optimism surrounding inflation expectations and with-it equity markets.
This week is a shortened week for the important US market as we have Thanksgiving on Thursday, followed by ‘Black Friday’ which traditionally marks the start of the Christmas sales and when retailers start to turn profitable. Hence the word ‘Black’.
Investors should look out for the market reaction to the Federal Reserve’s minutes of it latest FOMC meeting. On Thursday and Friday this week, we see the latest Purchasing Manager Indices from the major economies which will provide a clearer picture of how quickly the global economy is slowing.
TEAM plc (LON:TEAM) is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services. Growth will be achieved via targeted and opportunistic acquisitions, through team and individual hires, through collaboration with suitable partners, and organic growth and expansion.
