INVESTMENT MARKET UPDATE
It’s time for another look at the latest factors affecting the investment market across the globe. We hope, as ever, you find it useful and informative. Our thanks to our partners at Charles Stanley for their help in pulling the content together.
At the end of November, concerns over the new Omicron variant of Covid hit the global markets. You will have no doubt seen that scientists have expressed concern over its ability to evade vaccines and transmit at a faster rate than the Delta variant. The UK has reacted, so far, by introducing a number of travel restrictions. We will have to see what happens in the coming days and week. The news pushed the FTSE down a little, but not to any really concerning degree. However, analysts are expecting markets to remain volatile for some time, until we all know more about the implications. Perhaps unsurprisingly, there are three key questions that need answering. Is Omicron more contagious than Delta? Is it more dangerous? And how efficient are vaccines against it? Only time will tell.
Away from the pandemic, inflation continues to be at the top of investors’ lists of concerns. Shoppers face the biggest price rises in more than 30 years this Christmas after fears of widespread shortages resulted in more Britons starting their Christmas shopping in November this year. A survey of retailers published by the Confederation of British Industry (CBI) found that customer concerns about empty shelves this month had sent prices skyrocketing. The CBI said its monthly retail sales balance, which asks retailers to say if annual sales growth is rising or falling, rose to a three-month high of +39 in November – up from +30 in October.
As Joe Biden firms up the leadership of the all-important US Federal Reserve, the nitty-gritty of his tax and spending plans is yet to be agreed. Incumbent Jerome Powell was nominated for a second term as chair of the world’s most important central bank. Mr Powell is set to stay in the role, which includes managing inflation and regulating the financial system, for a further four years. The market tends to like consistency.
Still in the US, the world’s largest economy pledged to release 50 million barrels of oil from its strategic reserves to bring down soaring energy and petrol prices. Co-ordinated action is also being taken in other major oil-consuming nations, including China, India, Japan, South Korea and the UK. President Biden has repeatedly asked Opec to boost output more rapidly to ease global drivers of inflation – but to no avail. News of the parallel action coupled with demand concerns stemming from news of the new Covid-19 variant sent crude prices to a two-month low.
A global shortage of fertilisers will drive up food prices and leave poorer countries facing a food crisis, according to the head of fertiliser manufacturer Yara International. Svein Tore Holsether said that higher natural gas prices are pushing up the cost of fertiliser production and, as a consequence, food prices worldwide are rising and this will hit the world's poor. Mr Holsether said the large amount of gas required to make fertiliser had forced Yara to cut some production – and shortages of this vital feedstock in the global food chain were now emerging.
In the world of technology, two of the biggest names have been in the spotlight. Technology giant Apple is suing Israeli spyware company NSO Group and its parent company for allegedly targeting iPhone users with a hacking tool. NSO's Pegasus software can infect both iPhones and Android devices, allowing operators to extract messages, photos and emails, record calls and secretly activate microphones and cameras. Management at the Israeli group say its tools were developed to help authorities target terrorists and criminals. However, the spyware has also been used to target activists, politicians and journalists, which resulted in the US officially putting NSO on a trade blacklist.
Pay and conditions at the world’s largest retailer were once again in focus as an international coalition of unions, equality and environmental groups called "Make Amazon Pay" staged a day of action to coincide with Black Friday, demanding concessions from management. Protests were staged in 20 countries on what is among Amazon's busiest day of the year.