Markets up after ECB Signals End to Tightening Cycle

Published 2023/09/15, 08:27
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Markets closed in the green on Thursday after the European Central Bank (ECB) raised interest rates for a 10th consecutive time, but indicated that this was likely the end of their monetary policy tightening cycle. “The key deposit facility rate was raised by 25bps to a record 4%, but policymakers said that borrowing costs have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target,” Trading Economics reported. The German DAX rose by 0.97%, the French CAC40 climbed 1.19% and the British FTSE100 closed 1.95% in the green.

Upbeat economic data for the largest economy in the world continued to point to a resilient US economy, causing Wall Street to trade in the green at 18h45. “Retail sales rose more than expected, producer prices surprised on the upside, led by energy (while) weekly jobless claims rose by less than expected…which could prompt the Fed to keep borrowing costs elevated for a longer period,” added Trading Economics.

Despite data showing that local mining activities continued to decline in July 2023, the local bourse closed up by 1.43% supported by resource counters. Data showed that mining production fell by 3.60% y/y in July, the most in five months, against market expectations of a 0.5% increase. The resource sector was also boosted by comments from “China’s central bank (who) announced it would cut the reserve requirement ratio on most banks by 25 basis points from 15 September,” Trading Economics noted.

Gains in the tech, consumer and financial sectors boosted the Hang Seng, which closed up by 0.21% on Thursday. However, gains were restricted after ratings agency Moody’s changed its outlook on the Chinese property sector from stable to negative.

Gold traded at $1 911.92 an ounce at 18h50, while Brent crude traded hands at $93.70 a barrel at the same time.

PSG Wealth Daily Investment Update, 15 September 2023

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