This week the slight tick upwards in inflation and the weight of combined warnings from the world’s central bankers added to the cautious mood in 2024. Equities and bonds have given back a little more of their recent bumper gains as some investors consider whether enthusiasm for rate cuts is overdone. However, market movements this week seem to be more about timing than the overall picture. Wage growth continues to slow and lower energy and food costs are likely to keep headline inflation moving downwards. Falling retail sales adds to the picture of economic slowdown in the UK and Europe and rate cuts are widely expected later this year.
In contrast, tumbling Chinese equities are part of a longer-term trend. China’s growth rate is poor by its own standards and its property sector remains mired in problems. The drop in retail spending is also a concern as developing its domestic economy is a long-term goal. The government has so far avoided big stimulus programmes but it seems a significant change is needed to revive domestic and international confidence.
For the following stories, please click on this link*
- UK: Inflation feeds concern that rate cut speculation is overdone
- China: Equities slide as data shows economic problems persist
- Housing: Prices fall sharply, but some signs of optimism emerge
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