We have just passed the 4th anniversary of the lockdown and you can certainly say that these past few years have been a roller coaster for the UK economy, so how are things looking now?
The FTSE 100 at the beginning of Jan 2020 stood at just over 7,600*1 compared with today at nearly 8,000*2. Over the last few years inflation has been a concern, with the Bank of England Monetary Policy committee increasing interest rates 14 times, from an all time low of 0.1% to 5.25%, between December 2021 and August 2023, attempting to stabilise it. UK inflation (Consumer Price Index) was 3.4% in February 2024, down from 4% in January having peaked at 11.1% in October 2022*3.
There is a similar picture in the US although the Dow Jones (which measures the daily movement of 30 large American companies on the Nasdaq and the New York Stock Exchange) has performed better, standing at just over 28,500*4 , in Jan 2020 and today at just over 38,000*5. But they have also struggled with inflation and like us tried to control it with interest rate increases, with the Fed increasing interest rates 11 times, bringing them from a historic low of 0.08% to the current 5.33%, which is the highest the rate has been in over 20 years, their last increase being in July 2023. It is now more under control although the annual inflation rate in the US unexpectedly edged up to 3.2% in February 2024 from 3.1% in January, exceeding forecasts of 3.1%, but still significantly lower than 8.3% in 2022.
We have heard a lot of individuals voice concerns about possible market movements at the end of this year due to upcoming elections, the next UK general election which must be held no later than 28th January, 2025 and in the US presidential elections in November, 2024. Generally speaking, markets do tend to factor and price in events that they know are happening and even Trump being back in power is a known possibility. It is unpredictable events that are the greater risk for sudden downturns, as we saw after the first lockdown, the Ukraine war, and 9/11 in the US.
If you would like to discuss your investments why not pick up the phone today and book a free without obligation consultation.
*1 7622.40 (3/01/2020)
*2 7995.58 (15/04/2024)
*3 www.ons.gov.uk
*4 28,634.88 (3/01/2020)
*5 38,319.14 (3/01/2020)
