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 Sector Scopes Monthly Update September 2023 & iShares MSCI Germany Index ETF (EWG)

Equity markets continue to struggle with direction this week. The typical September slide was halted for a couple of days by bargain hunters and then resumed following soft earnings and guidance from the technology and airline sectors, which raised concerns about cost increases outpacing revenue increases. In addition, the Bank of Japan has started to hint that it could be ready to exit negative interest rates sometime next year; a hawkish turn from the last remaining dove.

Eight of the eleven main industry groups lost ground in the last week with Technology, Communications and Consumer Discretionary posting the largest declines. Utilities, Energy and Financials were the three positive performers boosted by a combination of rising energy prices and treasury yields levelling off.

The main reason for investors sitting on their hands, indecisiveness about what the Fed may do about interest rates in the coming months, could potentially get resolved next week. On Wednesday the 20th, the US central bank announces its latest interest rate decision and releases member forecasts for Fed Funds, GDP, inflation and employment.

The Fed is widely expected to hold steady this meeting and then potentially announce one more rate hike at its next meeting based on the last dot plot and a shift to increases every other meeting. Any change or hints toward change from the decision, statement, forecasts or press conference could potentially spark a reaction from investors.

The European Central Bank meets today and the Bank of England meets next Thursday, of the two, the ECB appears more likely to raise rates as it has the furthest to catch up. The earnings calendar is light but the economic calendar is active with a focus on inflation numbers, retail sales and housing market data for several countries.

In this edition of Equity Leaders Weekly, we take our monthly look at what the sector scopes are telling us about capital flows and at the troubling weakness in German equities.

Sector Scopes Monthly Update September 2023

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