It was a mixed week for markets across the world. Investors in the UK, US and Europe continue to worry about inflation, slowing growth and the impact that rising interest rates could have on these economies. Meanwhile, some relaxation in restrictions in China and Japan gave Japanese and Chinese stock markets a boost during the week.

US: Markets fall as recession fears rise

Stocks lost ground as investors continued to question whether the Federal Reserve will be able to rein in inflation without causing a recession. Whilst inflation appears to have peaked, there are still signs that the Federal Reserve will continue to raise interest rates moving forwards, even if it risks tipping the US economy into recession. Data on the labour market was mixed, but consumer confidence fell in May as workers grew somewhat less enthusiastic about their job prospects.

Japan: Relaxation of border controls boosts investor sentiment

Stocks ended the week up, as a further relaxation of Japan’s strict border controls and Chinese authorities’ decision to allow segments of the economy to reopen following stringent coronavirus lockdowns supported investor sentiment. Inflation in Japan rose to 2.1%, ahead of the Bank of Japan’s 2% target, but well below inflation felt in other large economies. The central bank remains committed to supporting the economy.

China: Beijing unveils support measures for the economy

Stocks rallied in a holiday-shortened week after Beijing unveiled a raft of support measures to cushion an economic slowdown triggered by the country’s zero-tolerance approach to the coronavirus. China’s factory activity shrank less sharply in May as virus restrictions eased and some production resumed. Headlines regarding China’s debt-laden property developers turned slightly positive. A survey showed that new home prices rose slightly in May and there are signs that property sales are on the rise.

Europe: Inflation, interest rate hikes and oil weigh on sentiment

Investors continued to struggle with concerns about elevated inflation, slowing economic growth, the pace of interest rate hikes, and the invasion of Ukraine. European Union leaders agreed to ban all seaborne Russian oil deliveries, covering about two-thirds of such imports, within months. The European Commission also announced a €300 billion plan to end the EU’s dependence on Russian energy imports before 2030. Inflation in the euro area accelerated in May to another record high of 8.1%.

UK: Shortened week for Platinum Jubilee celebrations

Markets were closed on Thursday and Friday for the Platinum Jubilee celebrations. Data shows that the housing market may be beginning to cool as sellers are having to cut asking prices, the average time to sell a home is lengthening and mortgage approvals fall to their lowest level since June 2020 as higher interest rates and the cost of living squeeze may be cooling people’s desire to buy homes.

The Omnis Managed funds, Openwork Graphene Model Portfolios and Omnis Managed Portfolio Service provide you with a diversified asset allocation in line with your Attitude to Risk, investing in Developed Market Equities, such as UK, US, Europe and Asia Pacific as well as Emerging Market equities.  Cautious and Balanced investors will also have significant holdings in UK and Global Bonds, as well as Alternative Strategies.  We believe this multi-asset approach aims to minimise global equity market falls in volatile periods.  Past performance is not a guide to future performance.  The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations.  You may not get back the amount you originally invested.

At Money & Mortgages, our team are happy to arrange video meetings and phone appointments.  For more information please contact us on 0161 505 0601 or via email info@moneymortgages.co.uk

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