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Gerald Fitzgerald’s Market Review October 1st

1st October 2018

LAST WEEK IN 30 SECONDS...

The US Federal Reserve continued on its well telegraphed path of raising interest rates last week, climbing to the eight rung of the ladder in rate normalisation. This news was overshadowed, however, by the political strife surrounding Donald Trump’s Supreme Court nominee Brett Kavanaugh. US equity markets were little changed with the tech heavy NASDAQ continuing its upward trend.

Italy’s Finance Minister Giovanni Trio’s attempts to pacify concerns surrounding the level of public debt following a revised budget proposal were met with investor scepticism as the Italian MIB stock market fell 3.8% and Italian 10-year bond yield rose 0.30% to finish the week at 3.14%.

Argentina’s woes continued as the Peso fell to fresh lows versus the US dollar, ending the week at 41.2, down over 50% year-to-date. With interest rates at 60%, inflation up 40% for the year and an election on the cards next year, investor concern remains high.

 

THIS WEEK IN 30 SECONDS...

Investors continue to scrutinise Giovanni Trio’s attempts to balance the European Commission’ pessimism with the country’s pacifying budget proposal and its impact on rising debt levels – The spread between Italian bonds and their German counterparts will be a key indicator to watch over the week.

Elsewhere, Jay Powel, US Federal Reserve Chairman speaks on Tuesday whilst the week sees the announcement of regular data including Eurozone unemployment rate and non-farm payrolls in the US.

 

CHART OF THE WEEK

Elon Musk reached an agreement with the SEC over the weekend to step down as Chairman of Tesla and accept a $40m fine for his ill-advised tweet on taking the company private at $420 a share. The share price has fallen in recent weeks as continuing doubts about the company’s profitability and emergence of rival firms in the electric vehicle space dominate headlines.