MARKETS

In general, equity markets continued their move higher last month, ending on a strong note, on what has been a very positive year for stocks. Performance of some of the main indices are highlighted below:

(All figures are based on bid-to-bid pricing with income reinvested, in Sterling Terms)

Inflation continues to be a focal point for investors, with US inflation rising at the fastest pace since 1982 to 6.8%, with prices rising for food, shelter, energy, used and new vehicles. This higher-than-expected print in inflation led the US Federal Reserve to signal that they would be looking to be more hawkish with their stance on monetary policy heading into the new year.

It was announced that the majority of US Fed Officials now expect interest rates will rise three quarter-points in 2022, compared to the original forecast of two quarter point rate increases, to help tame surging levels of inflation. They also announced that they plan to increase the pace of tapering of their huge bond-buying programme, which was put in place at the start of the coronavirus pandemic. They aim to reduce their purchases by $30bn at the start of this year, helping to remove the stimulus several months earlier.

In the UK, consumer prices rose to a 10 year high of 5.1% with the price of fuel, food and second-hand cars all helping to drive inflation higher. As a result, the Bank of England raised interest rates from 0.1% to 0.25%. The Governor of the Bank of England stated that the growing evidence of a very tight labour market and concerns of persistent inflation pressures in the medium term were the main reasons for an increase in the base rate.

Despite the increase in global coronavirus cases and tighter measures being put in place across the globe, investors thus far have shrugged off fears that the omicron variant will dampen down economic activity significantly. Currently, hospitalisations remain contained and death rates remain low, with the US announcing a reduced quarantine period from 10 days to 5 days, for individuals showing no symptoms of the virus who have tested positive. Nonetheless, the race is on once again between countries to get their populations vaccinated via the booster jabs, to help prevent any further lockdown measures from being put in place.

We would like to take this opportunity to wish all our clients a Happy New Year.

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The Boolers Investment Committee