Stock Market Review

by Paul Coffin

Markets saw a good recovery in the last quarter of 2023 and improved sentiment has carried over into 2024. The reason was a change of consensus over the future direction of interest rates.

For most of 2023 we had been expecting inflation to fall, pointing out that we did not expect interest rates to go higher. As inflation data came out much lower in October first in the US and then the UK, the markets began to believe that inflation was under control and that there could be scope for rate cuts in 2024.

As of writing, banks have begun to reduce borrowing and mortgage rates. We expect base rates to fall to 4% by the end of 2024, 1.25% lower than they currently stand. Indeed, they may end up slightly lower. This news was good for shares as is usually the case and many stock markets rose between 5% and 10%…

In the UK there has been much comment about the London Stock Market being in poor shape. It is certainly true that the Government needs to boost reasons to own shares. Firstly, they need to allow pension funds to hold more shares and to encourage private investors. To encourage this Capital Gains Tax should be cut and taxes on dividends reduced. Regulation needs to be reduced so that investment managers decide where to invest not regulators…

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All articles on this website are for information only and should not be seen as advice or a recommendation to take action. Please note that investments go down as well as up, you might not get back the original capital invested. Past performance is not a guide to any future.

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