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Inflation news better than feared

by | Jul 27, 2023 | News | 0 comments

Inflation news better than feared

As I began to pen a few words for this month’s quarterly report, news broke that the headline inflation in the UK dropped sharply in June. Down to 7.9% from 8.7% the previous month. This was indeed better than had been expected and the market had a strong rally, with the FTSE100 closing +134 on the day (19th July). It may however be too early to describe a drop in CPI from 8.7% to 7.9% as a decisive turning point in the UK’s battle against persistent inflation, but the data at least backs the idea that the trend is finally moving in the right direction.

Only last week there was little sign the UK Inflation problems were under control, with Gross Domestic Product (GDP) figures not helping. There was no growth over the three-month period to May, essentially meaning the economy has flatlined. The Bank of England use of interest rate rises to control inflation, may be starting to have an impact, but GDP is showing little sign of improvement.

Where does this leave the Bank of England?

We must now ask, where does it leave the Bank of England. After sending a shock wave to mortgage holders and bond markets with a 50-basis point rise in June, economists now feel that the monetary policy committee is unlikely to repeat this at the next meeting on the 3rd of August. Consensus now points to a quarter point rate rise to 5.25%, with the Bank having hiked rates from their 0.1% record low at the end of 2021. The Bank of England still needs to be vigilant and act accordingly until there is a level of certainty that inflation is back under control. Some analysts are expecting the Bank to now stop hiking at 5.5%.

Effects on the market

This news pushed the FTSE 100 higher, helped by gains in interest-rate sensitive stocks, with a basket of property shares making up lost ground.

While the housing market remains under pressure, with prices falling and mortgage costs higher, this reaction suggests an element of relief for the sector. Although current valuations for housebuilders share price is in an extended slump for the market, there is still ongoing demand for rental properties, and migration patterns. These are likely to back the long-term story for UK property.

 

If you would like to discuss your current investments or future plans we would be happy to schedule a call – Contact details for the CFM team are here and my contact details are:
E: stephen.lovelock@capitalfinancialmarkets.co.uk
T: 0203 6970561.

Stephen Lovelock, July 2023

Emma Tuckett

Investment Manager

Well-respected Investment Manager, Emma Tuckett, has joined CFM following a successful career at Killik & Co.

After nearly a decade working in Trading and Investments, Emma has worked with clients from a wide range of backgrounds and has extensive experience in Advisory and Discretionary Investment Management, with a particular focus on ESG investing and helping clients align their investments with their long-term objectives and values.

emma.tuckett@capitalfinancialmarkets.co.uk

Joanne Hill

Compliance Manager

Joanne has joined Capital Financial Markets as Compliance Manager having worked in the Independent Financial Advice sector for over 30 years. 

Joanne holds a degree in Business and Finance, the CII Diploma in Financial Planning and has a wealth of experience and knowledge within Financial Services.  Joanne’s role is to protect both Capital Financial Markets and our Clients.

joanne.hill@capitalfinancialmarkets.co.uk

Saffron Heasley

Client Administrator

We are delighted that Saffron joined the CFM team as our business apprentice capably fulfilling the Client Administrator role. Saffron brings enthusiasm, reliability and a strong willingness to learn. In this role, Saffron supports the smooth day-to-day running of the business, providing essential administrative support across the team helping to ensure processes run efficiently and compliantly.

With a keen eye for detail and a proactive approach, Saffron is developing a solid foundation while working closely with colleagues across the organisation. Saffron is a valued member of the team and plays an important role in supporting CFM’s operations as we continue to grow.

saffron.heasley@capitalfinancialmarkets.co.uk

Paula Mitchell

Head of Operations & People

Having worked with us as a consultant for over eight years Paula brings that familiarity to the organisation and has joined the CFM team as Head of Operations & People.

A seasoned finance and HR professional with a masters in HR Management, Paula combines analytical strength with a people-centred approach to drive operational excellence. Paula will be leading the team and supporting Paul with the operations and people strategy ensuring sustainable growth and the smooth running of the business.

paula.mitchell@capitalfinancialmarkets.co.uk