UK markets rose this week with the FTSE 100 Index gaining 1.21% to trade at 7,475 points at the time of writing.
Equities rallied earlier in the week as UK inflation fell more than expected to 4.6%, prompting markets to rule out any further interest rate hikes this year. This means the Prime Minister’s promise to halve inflation by the end of the year has been met early.
A large contributor to the fall, from the peak of 11.1% in October 2022, was last month’s reduction in the energy price cap, which limits how much energy firms can charge per unit of energy. The year-on-year rise in the consumer prices index was lower than the 4.8% predicted by economists and below the 6.7% pace recorded for September.
The figures from the Office for National Statistics (ONS) mean inflation is rising at its slowest pace since 2021. While a slowdown in inflation was widely expected by economists, including the Bank of England, it will provide a more positive backdrop as the government delivers its Autumn Statement next week.
Despite the slowdown in inflation, prices are still rising at more than twice the pace of the UK central bank’s 2% target. The overall price level in the UK was still more than 16% higher last month than in October 2021 according to the ONS.
Rail passengers and businesses are set to face a new wave of disruption in December after train drivers have announced more strikes.
The Aslef union has outlined a “rolling programme” of strikes at 16 train companies between December 2nd and December 8th, with different operators walking out on each day. The strikes represent the latest action in a long-running dispute over pay and the modernising of working practices which began last summer, and has led to sweeping disruption for rail passengers.
Commodity markets
In the commodity markets, Brent crude futures traded around $78 per barrel on Friday and are set to fall again this week, as inventories rose while industrial production fell. US crude inventories rose by 3.6 million barrels last week while production held steady at a record 13.2 million barrels per day, according to data released by the Energy Information Agency on Wednesday. Also, US industrial production fell 0.6% in October, as the United Auto Workers strike impacted motor vehicle output, according to data released by the Federal Reserve on Thursday.
Meanwhile, in China, crude refining throughput slowed 2.8% in October to the equivalent of 15.1 million barrels per day from a record high in September, according to data from the National Bureau of Statistics, suggesting slowing demand in the world’s second-largest economy. OPEC blamed speculators for the recent drop in prices, dismissing negative sentiment as exaggerated. OPEC said China’s crude imports remain healthy, rising by 11.4 million barrels per day in October.
The organisation also pointed to strong US economic growth in the third quarter and noted that the International Monetary Fund expects China’s economy to grow by 5.4% this year.
Gold traded around $1,990 an ounce on Friday and is set for a weekly rise as fresh economic data from the US bolstered the view that the Federal Reserve has finished with rate hikes, and could start monetary easing by the middle of 2024.
Equity markets
US equity futures traded slightly higher on Friday as Wall Street consolidated solid gains made in November. In Thursday’s regular trading session, The Dow Jones Industrial Average declined 0.13%, while the S&P 500 Index and the Nasdaq Composite closed slightly higher. US inflation fell more than expected to 3.2% in October, compared with a 3.7% rise in the 12 months to September, prompting a fall in treasury yields and a rise in equities. The 3.2% figure was also marginally below expectations of 3.3%. Core inflation, which strips out volatile food and energy prices, was also slightly weaker than economists had predicted, dipping from 4.1% to 4% on a year-on-year basis.
After the report, futures markets priced in a zero chance that the Federal Reserve would lift rates at its next policy meeting in December. Investors also brought forward their estimates of when the Federal Reserve would start cutting rates, pricing in two 0.25% cuts by July. Elsewhere, US retail sales declined less than forecast in October, falling by 0.1%, the Census Bureau said on Wednesday, spurred in part by a price related drop in spending on petrol. Although it was the first monthly decline since March, the figure was less than economists’ forecasts for a 0.3% decline, and September’s increase was revised higher to 0.9%.
The data lends some weight to the growing expectation among investors of a soft landing for the US economy, despite a year and a half of Federal Reserve interest rate rises that have pushed borrowing costs to multi-year highs. On the geopolitical front, US President, Joe Biden and his Chinese counterpart, Xi Jinping agreed to resume high level military communication this week, after meeting at a summit in San Fransisco designed to stabilise relations after several years of rising concern about a possible conflict over Taiwan.
Scam awareness during Black Friday and the holiday period
We want to ensure that you remain aware of potential scams, especially during busy times around Black Friday and the holiday period.
Scammers often take advantage of the festive period to exploit unsuspecting individuals not only by getting people to pay for items that are counterfeit or non-existent but to gather sensitive information under the guise of signing up for deal alerts, investment opportunities or prize funds.
Here are a few tips:
Stay Informed
Be cautious of unsolicited communications by emails, phone calls, or social media, especially if they demand urgent action.
Avoid gift cards as payment method
Criminals may encourage you to use gift cards as payment methods – it’s harder for fraud teams to trace.
Verify Contacts
If you receive any communication claiming to be from our firm, verify by contacting us directly using our official contact information. Do not use the contact details provided in suspicious messages.
Secure Online Practices
Ensure your online accounts have strong, unique passwords. Be wary of “phishing” attempts where scammers mimic legitimate websites to steal log-in details.
Protect Personal Information
Avoid sharing sensitive information, such as account details or passwords, through email or over the phone. Legitimate businesses will not request such information in this manner.
Double-Check Investments
If presented with new investment opportunities, thoroughly research and verify the legitimacy of the offering before making any decisions. Always be sceptical of ‘guaranteed’ returns or deals that are too good to be true.
If you ever have concerns or questions contact a member of our team.
The information provided in this communication is not advice or a personal recommendation, and you should not make any investment decisions on the basis of it. If you are unsure of whether an investment is right for you, please seek advice. If you choose to invest, your capital may be at risk and the value of an investment may fall as well as rise in value, so you could get back less than you originally invested.