Multi-Asset Weekly: Another Week of Rallies for Global Equities
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Chief Investment Office7 Oct 2024
  • Equities: Global equities were lifted by a strong US jobs report for the month of September
  • Credit: In a tight spread environment, A/BBB-rated bonds offer the best value
  • FX: DXY rebounded following upbeat US jobs data; Fed expected to maintain path of monetary easing
  • Rates: Market rethinking the pace and terminal rate for the cycle amid strong labour data
  • The Week Ahead: Keep a lookout for US Change in Initial Jobless Claims; Japan PPI Number
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Equities: Strong US jobs report bolsters investor confidence

Global equities clocked another winning week. Global equity markets advanced last week thanks to strong US labour market data for the month of September. Nonfarm payrolls (NFP) showed the US economy added 254,000 new jobs in September, significantly higher than economists’ estimate of 150,000 new jobs. The unemployment rate also declined to 4.1% despite expectations for it to stay at 4.2%. This supports the notion that the Fed may pull off a “soft landing” for the US economy. The S&P 500, NASDAQ and Dow Jones were up 0.2%, 0.1%, and 0.1% respectively for the week.

Asia equities sustained their upward momentum as investors in Hong Kong continued to digest the positive news of China’s latest stimulus package; the Hang Seng rose 10.2% for the week. Meanwhile, Japan equities bucked the trend as the country grappled with changes in its political landscape and uncertainties over its monetary policy moving forward; the Nikkei-225 fell 3.0% for the week.

Topic in focus: Europe equities – Renewables present fresh opportunities. Post the dual shocks of the pandemic and the Russia-Ukraine war, European governments were alarmed by the region’s reliance on foreign supply of energy and fossil fuels. The ensuing energy crisis shored up the urgency in transitioning Europe to green energy—the EU has set a target to reduce net greenhouse gas emissions by at least 55% by 2030; alongside policies focused on increased deployment of renewables and energy efficiency, there is also a focus on the diversity and resilience of clean energy supply chains, both for manufacturing and critical minerals.

In 2023, investment in renewables generation totalled almost USD110bn, an increase of more than 6% from the previous year, according to the International Energy Agency. Denmark and Germany remain at the forefront of the wind power sector in Europe despite ongoing profitability challenges, while Spain has led the surge in solar adoption to see wholesale electricity prices fall to record lows during periods of high solar output. A shift to cleaner and more secure energy sources is set to create significant opportunities to invest in renewable energy generation, grid networks for distribution, energy storage solutions, and new mobility.

Figure 1: Global installation of new energy storage projects by region

Source: CNESA, Wood Mackenzie, EASE, DBS



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