Closing post
Time for a recap
Factories in the UK, and across the Asia-Pacific region, have recorded a weak August.
The latest monthly poll of purchasing managers across Britain’s manufacturing sector found that new orders and new export business both fell at quicker rates in August, leading to another drop in production volumes.
Export powerhouses Japan, South Korea and Taiwan all saw manufacturing activity shrink in August too, with some factories blaming the impact of Donald Trump’s trade wars.
The head of the European Central Bank has warned that Trump’s attack on the US Federal Reserve could be a threat to the world economy.
“If U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world.”
UK government borrowing costs rose near a 27-year high today, as investors fretted about the risk of higher debt issuance and persistent inflation.
In the UK housing market, prices fell last month as potential buyers were hit by affordability challenges.
But there was also an increase in the number of mortgages approved by lenders.
The early rally in the London stock market has rather fizzled out.
Although defence stocks are still up, following the UK’s £10bn warship deal with Norway, the wider FTSE 100 index is now flat.
Even so, investors have enjoyed a solid rally since the turmoil triggered by Donald Trump’s trade war faded back in the spring.
Tom Stevenson, investment director at Fidelity International, explains:
“Bar a September stock market wobble - and history shows they sometimes happen at this time of year - investors will be celebrating a powerful summer rally by the time of next week’s St Leger Day horse race in Doncaster.
“That’s the second part of the old stock market adage that tells investors to ‘sell in May and go away, don’t come back ‘til St Leger’s Day’. It often fails to deliver - unsurprising, given the tendency of markets to rise over time - but it rarely falls over as spectacularly as it has this year.
“Since Donald Trump’s U-turn on tariffs in early April - when he paused levies for 90 days a week after imposing them - shares have soared. The S&P 500 is up from a low of below 5,000 to 6,500 last week. Here, the FTSE 100 has risen from 7,700 to 9,300. While in Japan, the Nikkei is up from 31,000 to 43,000 today.
