Lots of talk this week about the recession in the UK and the debate as to whether we are in one or not. It frankly doesn’t really matter, it’s just a psychological barrier and when activity picks up everyone then feels better, even if growth is still weak.
The pressure on central banks to lower interest rates is gathering momentum from many quarters, including Bank of England (BoE) policymakers. If we don’t cut rates sooner rather than later there are likely to be deeper economic costs. One of the problems the UK is having, is a lack of inward investment, due to all the uncertainty around the economy. This hinders productivity and makes us more vulnerable to inflationary influences.
Many emerging market economies are at a different stage of the economic cycle having raised interest rates earlier. There is a real disparity between economies in this broad asset class, top and tailed by India and China. Interesting to see that the best-performing indices over the last five days is the Hang Seng with investors being encouraged by China’s policy stimulus and the restrictions on short selling.
Post-market on Wednesday, Nvidia the AI company surged 9% after its sales guidance beat consensus, further feeding the frenzy around AI. Good timing for our switch in our Momentum portfolio, however, it will still hold circa 50% exposure to technology, just that the breadth of investment in technology will be now spread more widely through Asian and Indian companies.
Agenda
- Is the recession already over?
- So, why are mortgage rates rising then?
- The UK is more constrained than the US with inflation.
- What is expected to drive emerging market returns in 2024?
- Market Update
- Summary
Continues…
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