By The UK market is ending the week on a more subdued note, as investors digest Rishi Sunak’s announcement yesterday.
This epitomises an often overlooked fact – that the economy and stock market are very different beasts. While support packages and windfall taxes are what the nation has been calling for, the market effect of such measures hasn’t shown its face yet.
The big shakedown will be how investors in the UK’s oil and gas majors like BP and Shell will feel about windfall taxes. While not a long-term problem for profits, the incentivisation to invest their profits could see dividends trimmed.
That’s by no means a given, but even the possibility of such a move could see investors spooked as the dust settles.
The US is clearly feeling more upbeat. This is stemming from today’s US Personal Consumer Expenditure Core Deflator numbers, which is the Fed’s preferred inflation targeting measure.
Personal spending is expected to be up 0.7% in April, compared to 1.1% in March.
A weaker number in today’s announcement would give further reason to expect that the Fed’s next rate decision will be to pause, rather than increase – as it suggests inflation’s core is having some of its energy sapped on its own.
Good energy has transferred to Asia, with gains seen across Tokyo and Hong Kong.
Continued supply anxiety means Brent Crude oil prices are holding onto their ascent, with prices hovering at around $117.5 per barrel.
There isn’t an immediate end in sight for this trajectory, and while the length of the road may not be visible, it will certainly be rocky under foot.
Some property industry figures have passed comment in relation to the announcement by Rishi Sunak regarding his plans to help tackle the increasing cost of living within the UK, one of which is a pledge of £9bn to help a third of all UK households:
Director of Benham and Reeves, Marc von Grundherr, commented:
“While the monthly cost of a mortgage looks set to keep on climbing, a good number of UK households can breathe a sigh of relief as Rishi Sunak pledges further money to help alleviate the cost of living crisis.
Over £15bn announced to help mitigate increased energy costs for those on benefits, pensioners and the disabled, will go someway in helping the most financially vulnerable in society and the refreshed reduction in council tax will also help ease monthly living costs, with a £400 reprieve that is not longer required to be repaid.”
James Forrester, Managing Director of Birmingham estate agent Barrows and Forrester, commented:
“A step in the right direction but far too little, too late, for many of the worst hit UK households.
Quite frankly today’s announcements feel like forced rhetoric from a government on the back foot and as we know all too well, the results rarely match the headlining fuelling hot air.
What about reducing the cost of energy at the pump to make an immediate, meaningful impact?”
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