Weekly outlook: Fed expected to cut rates; UK inflation; Woodford holdings report

The key events for UK wealth managers for the week starting 16 September

Monday 16 September

– City of London Investment Group final results

– Chinese industrial production, fixed asset investment and retail sales growth figures

– FCA chief executive Andrew Bailey speech on next steps as the UK prepares for Brexit

Tuesday 17 September

– Zew Survey on economic sentiment in Germany and Europe

– US industrial production and capacity utilisation rate data

Wednesday 18 September

– Federal Reserve interest rate decision

According to AJ Bell investment director Russ Mould, markets are no longer pricing in a half-point cut, but they are still putting a 90%-plus chance on a quarter-point reduction to 2%.

But, he added investors still have to ask themselves why the Fed would cut when unemployment is near 50-year lows, wage growth is above 3% and the US economy grew at 2% year-on-year in the second quarter.

“It may be down to: pressure from President Trump; concerns over a stubbornly strong dollar; inflation that won’t quite meet the Fed’s 2% target; worries over global growth amid talk of tariffs and weak trade flows; or a softening in key economic data in the US, such as purchasing managing indices, industrial production and possibly even jobs.”

Psigma Investment Management head of investment Rory McPherson said: “It is nailed on that they cut rates but the rhetoric around further easing and the path of that will be key for markets; not least given the increasing pressure being put on them by President Trump who recently tweeted that rates should be at zero – they are currently 2.25%.”

– UK inflation report

Canaccord Genuity Wealth Management investment manger Sam Buckingham said core CPI year-on-year for July jumped to 1.9%, however forecasts for August’s reading are for this to fall back to 1.8%. UK consumers, and the economy as a result, are benefitting from these levels of inflation as it is resulting in sustained real wage growth.

“Indeed, average weekly earnings released on 10 September recorded a 4% rise in wage growth,” he added. “It will also be worth keeping an eye on retail sales numbers for the UK when they are released on Thursday.”

– EU CPI

– US housing starts

– US crude oil inventories

– EU27 new car registrations

Buckingham noted the EU27 new passenger car registrations year-on-year index has posted negative readings every month bar one since August last year.

“Due to the size of the industry in Europe, and the importance of it for the economy, it has been a significant contributor to the slowdown for the region’s economic growth,” he said. “Unfortunately the car sector isn’t showing many signs of improvement just yet – in the industrial production numbers released on 12 September, the sector recorded a 7.5% drop in output in July.”

Thursday 19 September

– Initial jobless claims US

– Allied Minds interim results

Earlier this summer the Allied Minds chairman and another director followed the chief executive out of the door as it continued to face pressure from activist shareholder Crystal Amber. The British tech incubator fund is a favourite of Neil Woodford but the latest Woodford Equity Income interim report revealed Woodford reduced his holding in Allied Minds during the first half of the year, from 28% to 23%.

– hVIVO interim results

Another Woodford favourite, this healthcare stock’s share price has dropped from 60p last year to 19.5p. Woodford Investment Management increased its holding in the company last August from 18.6% to 25.4% following positive results in a universal flu vaccine.

– UK retail sales figures

– FCA’s Implementing Mifid II – multi-firm review of research unbundling reforms

Friday 20 September

– UK public sector net borrowing

– Bank of England quarterly bulletin

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