Menu
Moderating Inflation and Chinese Stimulus Push Global Equities Higher

Moderating Inflation and Chinese Stimulus Push Global Equities Higher

Moderating Inflation and Chinese Stimulus Push Global Equities Higher

Equity markets followed their path higher last week as moderating inflation continued and China announced stimulus to their economy. Global equities (represented by the MSCI All Country World Index) were up 1.91% while domestic stocks (represented by the S&P 500 Index) were up 0.64%.

Consumer Price Index (CPI)

The Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, was released last week. The headline PCE index rose 2.2% at an annual rate in August, lower than consensus estimates and the lowest level since early 2021. The core PCE Index (excluding food and energy) rose 2.7%, in line with expectations. While moderating at a slower pace, PCE inflation keeps inching closer to the Fed’s long-term target of 2.0%. Personal income and spending both rose less than expected, showing another sign of moderation.

Moderating Inflation and Chinese Stimulus Push Global Equities Higher

Source: BEA

Q2 GDP

The final estimate of Q2 GDP from the US government showed economic growth at an annual rate of 3.0%, matching an earlier estimate but better than economist expectations for a downward revision to 2.9%. This marks 9 consecutive quarters of economic growth with the last negative quarter going back to Q1 of 2022.

Global Markets

Global markets were boosted by a surge in the Chinese stock market following an announcement of Chinese stimulus. The People’s Bank of China (PBOC) announced a cut to its reserve requirement ratio, reduced its short and medium-term rates, and a cut for existing home mortgages. Along with historic monetary policy moves from the PBOC, the Politburo also included a vow to meet its 5% growth target for 2024 using any necessary fiscal spending.

Looking Forward

This week a monthly jobs report will be released on Friday for September that markets eagerly await to give more insight as to the pace of future Fed rate cuts. While August’s gain of 142,000 jobs was higher than the month prior, it was less than consensus estimates. The labor market has also been under the microscope of investors as initial estimates for June and July were revised lower, totaling a combined 86,000 jobs.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

Related Posts

Financial planning and Investment advisory services offered through Diversified, LLC. 

Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC.

A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. The content on this website is not intended to provide tax, legal, or accounting advice, and you are advised to seek out qualified professionals that provide advice on these issues for your individual circumstances.

Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. Diversified only transacts business in states in which it is properly registered or is excluded or exempted from registration.  A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified does not provide tax or legal advice and individuals should seek the advice of their own tax or legal advisors for specific information regarding their situations. Investments in securities involve risk, including the possible loss of principal. The information on this website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

www.finra.org | www.sipc.org | Privacy Policy