Typically when discussing geopolitical tensions, our discussions have tended to take us to the Middle East and Ukraine but last week saw unfolding situations in both France and South Korea dominate the newswires. Taking the former first, the French government collapsed into chaos after a no confidence motion was tabled by the National Rally and New Popular Front to fend off the much unloved proposed budget by Prime Minister Michel Barnier. With Barnier forced from office, the spread between the German 10-year bund yield and French 10-year equivalent security temporarily reached 90 basis points, the highest seen since 2012[1]. That spread is typically tracked as a measure of political and financial risk on the Continent with the higher the level, the greater the perceived risks. Despite that, local equity markets took the situation in their stride, the broad based MSCI Europe ex UK index adding +2.5% (euros) with the main French board gaining by +2.7%. The FTSE 100 meanwhile rose by +0.3%.

Then on Tuesday evening, South Korean President Yoon Suk Yeol shocked the world by declaring martial law in what appeared to be a desperate attempt to cling onto power. The order was quickly rescinded, and the embattled President has subsequently survived an impeachment vote although sentiment towards the country has been damaged. Unsurprisingly, Korean equities sold off sharply throughout last week although that pain did not filter out into other Asian markets where the likes of Chinese and Japanese equities rose strongly, the Shanghai Composite and Nikkei 225 both climbing by +2.3% respectively. Meanwhile in the US, fresh records continued to be reached thanks largely to growth outperformance with the S&P500 and NASAQ advancing by +1.0% and +3.3% in USD.

Moving to commodities, oil prices recorded another week of losses despite the decision by OPEC+ to postpone the rollback of its oil production cuts. Brent crude shed -1.4% to $72.19 a barrel due to ongoing concerns around future global demand amid an oversupplied market. Gold also posted modest losses, the precious metal declining by -0.8% to $2,637 an ounce, Friday’s solid US jobs report adding to the view of cautiousness regarding the pace of future Federal Reserve rate cuts.

Week Ahead

Source: Workspace DataStream, 09/12/24
 

[1] T. Rowe Price – Global Markets Weekly Update 06/12/24

Past performance is not indicative of future performance.

The value of an investment may fall as well as rise. You may get back less than the amount invested.

The value of investments may fall as well as rise purely on account of exchange rate fluctuations.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2024. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group
does not promote, sponsor or endorse the content of this communication.

© S&P Dow Jones LLC 2024. All rights reserved

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.

Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.

Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.

SJP Approved 09/12/2024