- Stock-markets in the UK and Europe were mixed but little changed last week. Performance was muted with inflation worries to the fore along with concerns over the spread of the new coronavirus variant.
- A week ago the Bank of England’s Monetary Policy Committee echoed the US Fed’s official stance on inflation, describing the recent rise as “transitory” and said they expect inflation “to go above 3%” for a temporary period. However, the BoE’s chief economist, Andy Haldane, gave a warning on Thursday saying “by the end of this year, I expect UK inflation to be nearer 4% than 3%.” He joins the growing number calling for more immediate action from central banks to take action sooner rather than later to reduce inflationary pressures.
- At the start of this week Boris Johnson will today set out the final phase of the roadmap out of lockdown for the UK.
- Our Breadth indicator stayed positive but our Momentum Indicator ticked lower. again
- The US stock-market was higher last week. Growth sectors out-performed and Small-caps, as represented by the Russell 2000 index, lagged.
- Investors are currently having to weigh a number of factors, not least the Fed’s assertion that rising inflation pressures are transitory; the potential for continuing global economic recovery; and the rapid spread of the new coronavirus variant across the world – there are increasing concerns that the rapid spread of the variant will prompt fresh restrictions and interrupt the global economic recovery.
- For now at least though, markets appear resilient, buoyed by a better-than-expected jobs report on Friday that showed the economy added 850,000 jobs in June.
- Our Breadth Indicator stayed negative but our Momentum Indicator ticked back up.
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