Weekly Market Update – Week Ending 15/03/24

This week saw Donald Trump and Joe Biden each gather enough backing to set up a re-run of the 2020 battle for the White House, as they both secured their parties’ presidential nominations. Taking place on the 5th November, fireworks can be expected with no love lost between the two candidates.

With just under 8 months to go until the election, Trump is currently the bookies’ favourite to win a second term. Although he leads Biden nationally by only 1.7% (according to a RealClearPolitics polling average), in many of the vital key swing states, this lead widens further.

On Tuesday, the latest US inflation data was released. It showed inflation unexpectedly increased to 3.2% in February, from 3.1% in January, with economists predicting that there would be no change. The rise was blamed on the continued increase in motor insurance and health care prices. With inflation proving stickier than expected, this pushes back the expected timetable for the Federal Reserve to start to cut interest rates from their current 23-year high. The market currently expects the first decrease in interest rates to come in June, with three or four decreases predicted before the end of the year.

It’s a big week coming up in the UK. February inflation data is due out on Wednesday, and the Bank of England will set interest rates on Thursday. While a hold in rates looks nailed on, investors will be keen to hear what forward guidance Governor Andrew Bailey provides for the path of interest rates in the period ahead.

John Naylor, Chartered FCSI – Head of Investment Committee