Currency Markets
It may be 13 years since he stepped down from the European Central Bank but previous Governor Jean Claude Trichet is still closely listened to by financial markets. So when he spoke yesterday lunchtime and pronounced the recent JPY 10 move in the Japanese Yen versus USD as being a needed and likely healthy correction, market watchers sat up and took notice. JCT went on to say that there was no need for a 50bp move by the Federal Reserve and that the Fed should not be bounced into making a knee jerk response to what has already been a tumultuous week (so far). GBP however after a period of steadying yesterday was once again on the back foot yesterday afternoon versus both USD and EUR.
EUR/USD 1.0910
Equity Markets
Writing anything in the current market environment is akin to trying to catch falling knives, so we will not attempt to do so as it will doubtless be out of date by the time that you read this. Yesterday however famous fund manager Richard Buxton recently retired after 4 decades in the City wrote for the first time since his departure from Jupiter on stock market crashes in general and what he makes of this week’s events in particular: broadly a correction but unlike other corrections he expects markets to trade sideways until the outcome of the US Election in November after which it will be clearer as to how the global economy is looking after the anticipated US interest rate cuts from the Federal Reserve. Ominously he also says that he believes that the era of the Magnificent Seven US tech stocks bailing out the market is over. That combined with the news of Warren Buffet shedding his Apple holdings, will surely limit the upside to global equity markets for the next few months.
GBP/USD 1.2680