Photo by Joshua Woroniecki on Unsplash

At the close of the stock market on Friday, the Dow Jones Index (US30) decreased by 0.31% (-1.87% for the week), and the S&P 500 Index (US500) was down by 0.23% (-2.81% for the week). The NASDAQ Technology Index (US100) closed negative by 0.09% (-3.35% for the week). On Friday, hawkish comments from several FOMC policymakers supported the dollar, which was a negative factor for stock indices. In addition, a bullish factor for the dollar was the US manufacturing PMI data released on Friday. The US manufacturing PMI for September rose by 1.0 to 48.9, exceeding expectations of 48.2.

San Francisco Fed Chairwoman Daley said Friday she was not ready to declare victory in the fight against inflation and said inflation is unlikely to reach the Fed's 2% target in 2024. Kansas Fed Chair Michelle Bowman said the same thing, only in different words, "I continue to expect that further rate increases are likely to be needed to return inflation to 2% in a timely manner." FRB Boston President Collins said, "I expect that rates may need to be raised longer than previously thought, and further tightening is certainly not out of the question."

According to EPFR Global, outflows from global equity funds totaled $16.9 billion for the week ended September 20, the highest in 9 months. Bank of America said investors are fleeing equities due to the prospect of higher interest rates for an extended period of time.

Equity markets in Europe were mostly down on Friday. Germany's DAX (DE40) was down by 0.09% (week-to-date -1.90%), France's CAC 40 (FR 40) fell by 0.40% (week-to-date -2.29%) on Friday, Spain's IBEX 35 (ES35) was down by 0.49% (week-to-date -0.30%), and the UK's FTSE 100 (UK100) closed up by 0.07% (week-to-date -0.36%).

The EUR/USD pair has continued its steady decline since mid-July. This trend was primarily due to the contrasting economic performance of the US and Eurozone, as well as differences in the monetary policies pursued by the central banks of these countries. In recent days, these differences have pushed US Treasury yields to multi-year highs across all maturities. The Fed's benchmark rate currently stands at 5.50%, well ahead of the European Central Bank's 4.5% rate. This gap could widen further in the coming months as US borrowing costs could rise another 25 basis points in 2023, while the ECB has signaled that its policy tightening campaign is over.

UK private companies are cutting the number of workers at the fastest pace since the pandemic and deep financial crisis, confirming the Bank of England's decision to pause interest rate hikes for the first time in nearly two years. S&P Global's composite purchasing managers' index fell to 46.8 in September from 48.6 a month earlier, the sharpest decline in output since January 2021, when the UK was in lockdown. The reading was worse than economists had expected and sent the private sector deeper into contraction.

Precious metals prices closed moderately higher on Friday, with silver posting a two-week-high. A decline in T-note yields on Friday provided support for precious metals. Silver was also supported by a stronger-than-expected US manufacturing PMI report from S&P, which was positive for industrial metals demand.

Asian markets were mostly down last week. Japan's Nikkei 225 (JP225) fell by 3.07% for the week, China's FTSE China A50 (CHA50) gained 0.54%, Hong Kong's Hang Seng (HK50) ended the week down by 0.06%, and Australia's ASX 200 (AU200) ended the week negative 2.89%.

Singapore's Consumer Price Index fell to 3.4% from 3.8%, better than the expected 3.5%. Core inflation (excluding food and energy prices) fell from 4.1% to 4.0%, which was in line with forecasts. With inflation slowing and GDP growth having a weak outlook, economists generally expect the Central Bank of Singapore (MAS) to leave monetary policy settings unchanged during its scheduled meeting next month.

S&P 500 (F)(US500) 4,320.06 −9.94 (−0.23%)

Dow Jones (US30) 33,963.84 −106.58 (−0.31%)

DAX (DE40)  15,557.29 −14.57 (−0.094%)

FTSE 100 (UK100) 7,683.91 +5.29 (+0.07%)

USD Index  105.58 +0.22 (+0.21%)

News feed for 2023.09.25:

• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – Eurozone German IFO Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 16:00 (GMT+3).

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