22 April 2022 – Comment from Steve Clayton, HL Select Fund Manager:
“Stocks were weak overnight in the USA and Asia. Once more Tech shares led the way lower, with the Nasdaq Composite index losing 2% in value, whilst the broader S%P 500 index lost half that much. Tokyo saw the Nikkei index slide 1.6% with a similar fall in Australian stocks. Futures markets are indicating a bumpy start to trading in Europe.
Rising inflation is undermining bond prices – the yield on UK 10 year government bonds has risen above 2% in early trading today, their highest yield in more than five years. Markets are factoring in further rises in interest rates by the Bank of England, with the 2 year UK Government bond now yielding over 1.75%.
Fed turns increasingly hawkish. Jerome Powell, Chair of the US Federal Reserve looks to be taking a tougher line on monetary policy as the Fed seeks to calm the current surge in inflationary forces. Describing the labour market as overheated he raised the possibility of hiking US interest rates in 50bp steps, with the first such move likely in May.
Ukraine has estimated that the cost of rebuilding the nation after Russia’s invasion is fast mounting up, with an estimated $600bn required. Ukraine’s Prime Minister, Denys Shmyhal is requesting help from the International Monetary Fund, saying that in the short term, Ukraine needs around $5bn a month in funding.
UK retail sales fell by more than expected in March. Analysts had been forecasting a 0.3% drop but the actual outcome was a fall of 1.4% as the cost of living crisis starts to bite down on consumers. So far, wages are not keeping pace with inflation and this is feeding through to consumer confidence, which GfK today reported to have hit its lowest level since the depths of the financial crisis. Bloomberg reported that the fall in UK living standards is now happening at its fastest pace in at least 66 years.
B&M European retail has announced that CEO Simon Arora is to step down and retire in a year’s time. Simon and Bobby Arora acquired the business in 2004 and have grown it from 21 stores to over 1,100 strong across the UK and France. Bobby will remain in his role as Group Trading Director. Chairman Peter Bamford will start the search for Simon’s replacement.”