Weekly Market View from Realm Investment Management. Week ending 5th August 2022.
The UK stock-market was fairly flat last week (FTSE) and the US slightly higher (SP500), although the tech-heavy Nasdaq index was stronger. Oil was sharply lower last week and has in fact fallen significantly since this year’s high which was back in March following Russia’s invasion of Ukraine – does this indicate that inflation will abate?
Shock data of the week was the US jobs report on Friday which showed the economy added more than 500,000 in July, a much higher number than expected. It’s difficult to see the National Bureau of Economic Research (NBER) declaring that the US is officially in recession with such strong employment numbers. Unfortunately, in the present situation this could be interpreted as one of those “good news is bad news” numbers as the Fed may feel the need to raise rates at an even faster pace on the back of it. Inflation data will be closely monitored going forward.
In the UK, the Bank of England lifted interest rates by 0.5%, to 1.75% attempting to curb inflation which is expected to peak at 13% late this year. The central bank is forecasting a recession that will last for 15 months.
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