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This week provided a stark reminder of the link between politics and financial markets. News that President Xi Jinping secured a third term as leader of China’s Communist Party sent markets roiling. The yuan hit its weakest level against the US dollar in more than 14 years, while Hong Kong's Hang Seng Index took its biggest plunge since the 2008 financial crisis.
In Europe, meanwhile, the appointment of Rishi Sunak as the UK’s new Prime Minister seemed to have been picked in an attempt to calm markets. Sunak, a former finance minister, inherits the formidable task of stabilizing the British economy following the resignation of Liz Truss, whose tax plan sent markets into a tailspin. While Britain’s FTSE 100 stock index continues to yo-yo (as markets do) and economic headwinds still provide plenty of reason for caution, CNBC notes that some analysts are “unwinding their gloomy prognosis for UK stocks.”
As the US midterms draw closer (12 more days!), Business Insider offers a glimpse at how these elections historically have impacted the stock market. The bottom line is to expect more volatility in the weeks ahead. In addition to elections, all eyes are on the Federal Reserve, which is expected to raise interest rates at next week’s meeting following in the footsteps of the European Central Bank’s decision this morning.
Investors have also been watching tech stocks this week, which took a tumble following disappointing earnings reports from Alphabet, Microsoft, and Meta. Analysts see signs of a slowdown in digital advertising and cloud computing, but the rising value of the US dollar was also a contributing factor to the weaker-than-expected earnings. (Here’s a refresher on how exchange rates impact multinational companies if you want to know more.)
Many experts agree that maintaining your focus on the long-term will keep the stress away through market ups and downs. And remember: just as exercising your vote helps shape the future you want to see, so do your investment choices. Whether you invest to support sustainability, advance social causes, or align with your faith or other values, your investments can make a difference.
News you can use
- Fast Company’s 144 Brands That Matter in 2022 spotlights companies leading on social action, sustainability, inclusivity, and fun. The list includes both startups and brands owned by publicly-traded companies, such as Alaska Airlines, Coursera, GoodRx, The North Face, Polestar, and Poshmark. Keep in mind that judges chose honorees based on brand perceptions; FWIW’s guide to researching ESG Stocks and Funds may also be a useful resource as you research potential investment decisions.
- If you are looking to scare your neighbors for 🎃, you might consider going as the latest UN climate change report. It says current climate pledges fall well short of the commitments needed and will lead to global warming of 2.1-2.9°C by the end of the century, way past the 1.5°C target limit. Scientists say this would be deadly and make a big difference in how habitable the planet is.
- Financial news website Investor’s Business Daily (IBD) has released a list of the 100 Best ESG Companies of 2022. The ranking takes into account environmental, social and governance (ESG) sustainability scores from Dow Jones Newswires and IBD’s technical and fundamental stock ratings. The top 5 slots went to Worthington Industries, J.B. Hunt Transport Services, Verisk Analytics, Texas Instruments, and Apple.