German Manufacturing Recession Continues

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  • September 30, 2019

German Manufacturing Purchasing Managers Indices (PMIs) for September showed that the embattled sector slipped further into recession. The data came in at 41.4, below the 43.5 recorded in August and well below expectations of 44. A reading below 50 indicates a contraction in activity. The German figures also dragged on the PMIs for the Eurozone as a whole, with the composite measure for the region falling to 50.4, indicating that there was little or no growth in the economy over the month. The data continues to support the action taken by the European Central Bank (ECB) to cut rates and restart quantitative easing, however, loosening monetary policy may have little effect on a sector of the economy that is so highly dependent on global demand. 

Parliament un-Prorogued 

The Prorogation of Parliament which began on 9th September was deemed unlawful last week. The Supreme Court decision meant that MPs returned to Parliament on Wednesday, continuing in very much the same way, with divisive debates and elaborate schemes. The Prime Minister is now once again calling for an election, although this continues to be opposed by Parliament. As ever, UK politics is advancing so far into the unknown that it is increasingly difficult to anticipate what the situation may be one week ahead, never mind by the end of October. Markets deliberated over what the judgement meant, with the pound rallying on the announcement and then falling back as the debates began on Wednesday.

Trump Impeachment 

With control of the House of Representatives, the Democrats have officially launched an investigation into alleged collusion Trump had with Ukraine. A memorandum from the White House showed that Trump asked his Ukrainian counterpart to investigate former vice-President and Democratic Presidential frontrunner Joe Biden. The investigation is likely to cause much noise and debate, although as the Republicans control Congress, it is unlikely that Trump will ultimately be impeached. Again, markets were unclear how to take the news as it is not obvious that this changes anything. Which an upcoming presidential election which is expected to be tight, there is already political volatility priced into markets. Furthermore, with Trump appearing to be immune to such accusations, impeachment proceedings are unlikely to sway his army of supporters and may even invigorate them. 

Market Data

(* GBP Returns)   % 1w* % 1m*
UK 1.12 3.55
US 0.54 0.50
Europe ex UK 0.61 1.56
Japan 1.32 5.80
Emerging Markets -0.35 2.55
Oil -1.88 1.73
Gold 1.01 -2.69

Posted By Will Dickson

Chief Investment Officer Will Dickson is a Chartered Wealth Manager as part of the Chartered Institute of Securities and Investment (CISI) qualification scheme. This recognition was obtained following an MSc in Finance and Investment from the University of Exeter, and an Accounting and Finance BSc from the University of Bath. Will’s exceptional talent is recognised by CityWire’s Wealth Manager, having been named as one of the UK’s Top 30 investment managers under the age of thirty for the last three years. Will manages and oversees P1’s range of investment portfolios. Working with the Investment Team, Will shapes the investment policy and fund selection for our Passive, Hybrid and Ethical and Sustainable portfolios. In conjunction with managing the fund portfolios, he oversees and our AIM Inheritance Tax and Tier 1 Investment Visa equity portfolios. Will has joint written articles with P1’s Head of Research, Dr Rayer. Their article “Hypothesis: Risk, like Mass and Energy, can neither be created nor destroyed” featured in the CISI’s The Review of Financial Markets. In addition to contributing to articles with Dr Rayer, Will often delivers P1 CISI Endorsed lectures to Independent Financial Advisers. You can see Will’s take on weekly investment news here.