At the start of the year the cumuli nimbus clouds hanging over global stock markets looked both ominous and threatening. There seemed to be no end in sight to the Russian invasion of Ukraine. Gargantuan energy costs had fuelled inflation in 2022 to levels not seen for nearly 40 years, especially in the UK.
The UK’S inflation in October 2022 stood at an eyewatering of 11.1%. The EU’s level was a smidgen less at 10.6%. US inflation only reached 7.2%, courtesy of energy sufficiency. Investors have also had to take into the consideration the fact that the Chinese economy has not come out of the pandemic in good shape. The Peoples’ Bank of China have had to cut rates officially from 2.65% to 2.
Unsurprisingly Russia remains under the economic cosh. The Rouble has dropped close to 25% against the Dollar since January and interest rates have been jacked up by 3.5% to 12%. One of Russia’s responses may be to increase the price of their oil.Consequently, for many sectors, increased profits have been at parsimonious levels. The cost of servicing debt has stifled growth with the consumer being left with less disposable income to spend on retail therapy.
August has proved an investors’ nightmare. The news flow has been dire, as illustrated by my observations above. Growth in Europe is almost at recessionary levels. The UK is just about bobbing around just above the Plimsoll line with the US hoping to deliver GDP of 1.5%. These look rather stagnant efforts, offering scant hope of much in the way of an increase in 2024. These indices have surrendered value in August - FTSE 100 -5.7%, DAX -5.3%, S&P 500 -4.8%, NASDAQ -7.3%, Hang Seng -10.
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