Market snapshot: investors await barrage of key economic data

Investors will be on their toes this week as a barrage of economic data globally is likely to provide hope, caution and even disappointment in equal measure.

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One of the many central banks to reveal their latest interest rate decision will be the Federal Reserve, where a cut of 0.25% is fully priced in and where hopes of an aggressive 0.5% reduction have all but evaporated. This in turn will shift attention to the accompanying comments on the perceived outlook, with investors still expecting two further cuts after the one to come before the year is out. Should Fed chair Jerome Powell be more circumspect, disappointment will follow, with the main indices at or around record highs in anticipation of an easier monetary environment.

In the meantime, risk appetite continues to be on the table, especially for the growth engine that is the Nasdaq, which hit yet another record closing high on Friday. Retail sales numbers this week will also be a revealing read as the vital cog of the economy, the consumer, will be tested not only in terms of current activity but also in confidence for immediate prospects.

Aside from the Nasdaq, the other main indices drifted marginally lower but each finished the week in positive territory. These gains bring the year to date performances of the Dow Jones, S&P 500 and Nasdaq to growth of 7.7%, 11.9% and 14.7% respectively.

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Asian markets ground higher to post slight gains, despite some more concerning news emanating from the world’s second-largest economy, where the fractious relationship with the US and the real threat of mutual tariff harm has hindered growth. China revealed that industrial output had slowed to a 5.2% expansion from 5.7% in August, with retail sales were also ahead but lower with 3.4% growth year on year, shy of the 3.8% forecast. There was also unfortunately growth in the unemployment rate to 5.3% which leaves employment as a lingering issue in addition to tepid consumer demand and a struggling property sector.

The UK has a testing week in prospect as a number of data releases are likely to do little to improve the economic mood. Retail sales and consumer confidence reports will almost certainly show a retrenchment of optimism ahead of what could be a punishing autumn Budget to come. In addition, the release of both CPI and RPI numbers are expected to show a continuation of the lingering effects of inflation which have tied one hand behind the back of the Bank of England. As such, a no change interest rate decision is expected this week, despite the increasingly obvious requirements for stimulus to revive a flagging domestic economy.

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These limited to non-existent growth prospects have been an inevitable headwind on the FTSE 250, which has been limited to a gain of 5% this year, although this is a marked improvement from the weakness experienced some months ago. In contrast, the FTSE 100 is to a large extent insulated from this weakness given its international perspective and, despite making little progress at the open, is now up by 13.6% in the year to date.

AstraZeneca (LSE:AZN) drifted lower after announcing a pause in its planned £200 million expansion at its Cambridge site, hot on the heels of other pharmaceutical strategic withdrawals given the perceived lack of interest from the government. Despite the dip, the shares are up by 21% so far this year, but from a UK perspective such moves add to the possibility that Astra could seek to reflect its US exposure by switching its primary listing, which would be a major reputational blow.