- US Markets buoyed by Fed Chair’s comments
- Chinese markets react to news restrictions may be easing
- UK consumers fall further into debt
Matt Britzman, Equity Analyst at Hargreaves Lansdown
“The S&P 500 added more than 3% yesterday evening following comments from Federal Reserve Chair, Jay Powell, that signalled a potential slowing of interest rate hikes. Markets have been clinging to every scrap of positive news lately and this was a continuation of that trend. Comments from the Fed chair might have suggested a slight breather from the pace of hikes we’ve seen more recently, but there were clear warnings that the Fed was committed to returning inflation to levels akin to longer term targets. Mr Powell will be fully aware markets are hanging on every word he says – but the reality is, given the time lag from rate rises to any real impact on the economy, it’s an almost impossible task to slow at the perfect time and the jobs far from complete.
In China, markets were given a slither of hope on news that some of China’s zero-covid policies were being relaxed in the southern city of Guangzhou. The Shanghai Stock Exchange popped in early trading but gave most back by close, ending up 0.45%. Daily cases remain in the thousands, but Vice-premier Sun Chunlan said yesterday that the pandemic fight was entering a new stage, with vaccination rates on the rise and current variants being less harmful. Ongoing restrictions in China have impacted businesses across the globe, from luxury fashion to tech giants like Apple, so any news that conditions could improve give a small boost to sentiment. The underlying issues remain though, investor sentiment toward the region remains low and whilst there was a rebound in November, it’ll take a lot more before attitudes see a real, prolonged shift.
Citizens Advice have warned people are falling further into debt to pay for basics like rent and bills as savings have been abolished by months of increasing costs. The charity warned half of its debt assessment clients were now in a position where they’re ending the month in the red, just to cover the cost of essentials. Last month we saw a range of large banks put hundreds of millions aside in preparation for defaults on debt, as the cost-of-living crises deepens. When you take a step back and look at the range of data on hand, the picture looks bleak. Short term, we might see demand hold relatively steady as people take on more debt to cover costs over Christmas but that demand boost isn’t sustainable.”
