Take Two: US economic growth slows in Q3; BoJ holds rates steady
- 04 November 2024 (3 min read)
What do you need to know?
The US economy grew at an annualised rate of 2.8% in the third quarter (Q3) - according to an advance estimate - down from 3.0% in Q2, but broadly in line with forecasts. The rise primarily reflected increases in consumer spending, exports, and federal government spending, which were offset by a decrease in residential fixed investment, among other factors. Elsewhere the Eurozone’s economy grew at a better-than-expected pace of 0.4% on a quarterly basis in Q3 – up from 0.2% in the previous three months, in part boosted by an Olympic-inspired lift to French GDP. Meanwhile Eurozone inflation rose higher than expected to target, at 2.0% in October, up from 1.7%.
Around the world
The Bank of Japan (BoJ) held its benchmark short-term interest rate at 0.25% at its latest policy meeting, keeping it at its highest level since 2008 and meeting market expectations. This decision came amid some political uncertainty following Japan’s recent election which saw its ruling coalition lose its majority. However, the BoJ suggested that risks around the US economy were subsidising somewhat and it continued to strike an upbeat tone in its accompanying statement, suggesting further hikes remain on the cards if the economy continues to develop in line with its forecasts. AXA IM expects the BoJ to wait until early 2025 to push through the next 0.25% hike.
Figure in focus: $2,800
The price of gold rose to a fresh high last week, reaching some $2,800 an ounce on Wednesday – meaning bullion has climbed by a third across the course of this year so far. The gold price hit a number of records during the third quarter and the value of demand exceeded $100bn for the first time, according to the World Gold Council. Prices have likely benefited from high demand amid persistent geopolitical tensions, expectations of monetary policy easing and uncertainty around the US presidential election - investors typically view gold as something of a safe haven during periods of uncertainty.
Words of wisdom
Global Biodiversity Framework Fund: Established to support the implementation and financing of the Kunming-Montreal Global Biodiversity Framework (GBF), which aims to end nature loss by 2030. At this year’s United Nations biodiversity conference COP16, eight governments pledged an additional $163m to the Global Biodiversity Framework Fund (GBFF). The pledge brings the total amount committed to the GBFF to just under $400m - less than 2% of what nations promised to mobilise by end-2025. The money will help countries conserve and restore critical ecosystems as well as strengthen biodiversity policy and governance.
What’s coming up?
All eyes will be on the US this week, as voters hit the polls on Tuesday to elect their next president. It’s also a big week for central bank activity, with the Reserve Bank of Australia holding its monetary policy meeting on Tuesday, while the Bank of England and Federal Reserve (Fed) hold their respective interest-rate setting meetings on Thursday. In terms of economic updates, composite Purchasing Managers’ Indices for China, the US, UK and Canada are reported on Tuesday while the Eurozone’s numbers are issued on Wednesday. On Friday Canada reports its latest unemployment data.
Disclaimer
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
© 2024 AXA Investment Managers. All rights reserved
Risk Warning
The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.