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Published 12 September 2022
Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
WITH the Bank of England postponing its next interest rate decision, we will have to wait until next week (22 September) to see whether analysts are correct and we see the base rate increase by at least 0.5 percentage points to 2.25%. That would take the base rate to its highest since December 2008.
Whether the Bank’s Monetary Policy Committee decision changes in light of Prime Minister Liz Truss’s wide-ranging energy bill guarantee plan remains to be seen. While energy bills have been capped, the measures are expected to cost the Treasury in excess of £100bn over the next two years and broader inflation still remains high for households and businesses alike.
Later this week we will get the latest UK inflation figures (consumer price index) and July’s GDP estimate and trade figures along with construction output data. We are also due to get updated labour market figures and August’s retail sales figures in the week ahead.
Something that will be occupying at least some of the new PM’s attention will be the Northern Ireland Protocol. The so-called grace periods, which the EU and UK agreed in 2020 to allow lighter touch controls on trade between Great Britain and Northern Ireland, are due to expire on Thursday.
Ms Truss was considering triggering Article 16 proceedings, but whether she will remains to be seen. Her allies have said she’s not likely to activate the emergency Article 16 override provisions in the Northern Ireland protocol in the coming weeks. Meanwhile, US president Joe Biden has given a clear warning to the UK not to unilaterally rip up Britain’s deal with the EU over trading arrangements in Northern Ireland.
Outside the UK data due in from the US on inflation is on the agenda. The US consumer price index reading is expected to show the annual US inflation rate softening to 8.1% in August from 8.5% in July.
And in Kenya, new president William Ruto will be sworn in this week after his election victory was confirmed by the country’s supreme court.
On the markets it’s a relatively busy week for company announcements. Stock watchers will be keeping an eye on Ocado which is, like all retailers, at risk of feeling the worst effects of the purse-tightening prompted by the cost-of-living crisis. DIY chain Wickes, home furnishings chain Dunelm and rail ticket seller Trainline will also post results. And while John Lewis may not be listed on the stock market, Thursday’s half-year results will give us good insight into whether its customers have bought into its desire to be the “world’s first moments-based retailer” i.e., by spending to make everyday moments brighter, apparently – and I suppose, what that means for the rest of the sector. That sentiment could also filter through to the likes of premium mixers-maker Fever-Tree Drinks which posts first-half results this week.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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