Weekly Market Update- Week Ending 18/11/2022

Following the gains seen last week, this week has been relatively calm.

The nation waited patiently yesterday to receive Jeremy Hunt’s much anticipated Autumn Statement, with all areas of society affected in some way. Still reeling from the so-called mini-budget 8 weeks ago, the relatively muted market response to an announcement will undoubtedly be considered something of a success by the government. The aim of their £55bn fiscal consolidation is to restore credibility to the UK balance sheet, reassure global investors that we can pay our debts and (hopefully!) put the country on a sustainable path to long-term economic growth.

On Wednesday, the latest inflation data for the UK was released. At an annual rate of 11.1% October’s data print was the highest for 41 years and shows continued momentum from September’s figure of 10.1%. Most worrying from a cost of living perspective was the rate of food price inflation, which came in at 16.5%.

Economists had predicted the rise in October but it was ahead of their expectations of 10.7%. The higher-than-anticipated inflation level will likely put further pressure on the Bank of England to continue increasing interest rates. A further 0.5% increase, from the current 3%, is expected when they next meet on the 15th December.

The UK doesn’t face these challenges in isolation. Across the Eurozone, many countries are experiencing inflation at similar or higher levels. Italy for example hit 12.8% in October, while the Netherlands was even higher at 14.3%. If you think that is high, with annual rates currently above 80%, Argentina and Turkey carry the crown for the highest levels of inflation amongst the G20 nations.

John Naylor, Chartered FCSI – Head of Investment Committee