The notebook is a place where interesting people say interesting things. Today, it’s Victoria Scholar, head of investment at Interactive Investor
The market mood is picking up with the S&P 500 enjoying its best week since March. The Dow surged over 2% on Friday, its biggest one-day gain since January and the Nasdaq Composite completed its sixth straight week in the green.
Supporting markets was the US nonfarm payrolls figure which hit 339,000 in May, much higher than forecasts for 190,000 thanks to new jobs in professional and business services as well as government and healthcare. While the unemployment rate picked up to 3.7%, it is still near the lowest level since 1969. The US economy has enjoyed 29 consecutive months of job creation, highlighting the underlying strength of the labour market stateside.
A debt ceiling disaster has fortunately been swerved, removing one of the biggest near-term risks to markets and providing a tailwind to equities. President Joe Biden claimed this was a ‘crisis averted’ after US Treasury Secretary Janet Yellen said last month that a failure to raise the government’s £3.4 trillion debt ceiling would result in ‘an economic and financial catastrophe.’ Despite a high-stakes political battle, the US has avoided its first default in history thanks to a bipartisan agreement, allowing the Treasury Department to continue paying its bills.
The oil market has also enjoyed a tailwind thanks to Saudi Arabia which announced plans to reduce its oil output by 1 million barrels per day in July, landing its production level at around 9 million barrels per day, a multi-year low. This has helped to offset some of the oil market weakness experienced over the last year, reflecting concerns about softer global demand.
Clearly uncertainties remain with a gloomy global growth backdrop, China’s bumpy post-covid recovery, elevated inflation levels and the potential for further Fed hikes, but it is encouraging to see some positivity with a debt ceiling deal, a strong US labour market and more bullish oil market dynamics.
Spider in the web
Sony’s “Spider-Man: Across the Spider-Verse” scored an estimated $120.5 million at the US box office over the weekend, making it the second biggest movie opening of 2023 after “Super Mario Bros. Movie” from Universal. EntTelligence reported that the latest Spiderman movie is understood to have attracted audiences of over 9 million last weekend, representing more than half of all movie ticket sales from Thursday to Sunday, highlighting the popularity of Miles Morales and the Marvel movie franchise.
Long-term mortgages the new normal
There is record demand for long-term loans among those making their first steps onto the UK property ladder. According to UK Finance data, 19% of all first-time buyer mortgages in March were for terms of 35 years or longer. This is the highest percentage since records began in 2005 and a sharp increase from 9% seen in December 2021 at the start of the Bank of England’s rate hiking path. Mortgages have become increasingly expensive as the central bank battles to tame inflation.
Bearing into China
Analysts are turning less bullish on China. Morgan Stanley has reduced its target for the MSCI China Index from 80 to 70 but retains its overweight assessment. It follows a similar move from Goldman Sachs which also cut its target on the MSCI China. Both banks have highlighted their worries about a weaker currency and earnings. China has had a bumpy recovery since Beijing unwound its anti-covid zero tolerance lockdown measures late last year. Shares in China proxy play Burberry for example have struggled since April.
Can I quote you on that?
“This is a Saudi lollipop…We wanted to ice the cake.”Saudi Energy Minister Prince Abdulaziz after the Kingdom announced plans to cut oil production
The ii Family Money Show
The third series of our podcast ends this week with Gabby Logan chatting to Josh Lewsey, the England Rugby World Cup winner. Despite his success as an Army officer and on the rugby field, Josh always planned for a career in business and is now a financial services CEO in Hong Kong. He takes listeners inside the 2003 England rugby camp, but tells Gabby why he prefers to look forward and how he aligns his investments with his personal goals. All episodes from Series 1-3 are still available, featuring Lord Jim O’Neill, Dame Jayne-Anne Gadhia, Nick Leeson and Deborah Meaden.