top of page
main web.jpg

July 2023


Welcome to our latest global investment market update

A warm welcome to our latest update. In this month’s edition we are taking a look at the global economy and what recent news means for investments. We are grateful to our friends at Charles Stanley for their input into this update.


As always, we hope you find the information both insightful and interesting. If you would like to discuss anything we talk about then please do not hesitate to get in touch.



There has been much for the Bank of England (BoE) to consider over the last week. Firstly, UK wage growth grew faster than expected and hit a record high. That would point to a 0.5% increase in interest rates in August.


Also supporting the likelihood of a 50-basis-point hike by the BoE at its next meeting was Employees’ regular average pay, which excludes bonuses. This grew at an annual rate of 7.3% in the three months to May. That’s the highest growth since records began.


The day before the data was released, BoE governor Andrew Bailey and Chancellor Jeremy Hunt jointly called for wage restraint. They noted that high pay settlements were hampering the fight against inflation. There were, however, some signs of weakening in the labour market, which should help cool wage growth if it continues. The unemployment rate for March to May 2023 increased by 0.2 percentage points to 4%. This was higher than analysts’ expectations of 3.8%.


That being said, just this morning, we had the latest inflation figures. Inflation fell by more than analysts expected, and it now stands at 7.9%. This is the lowest level it has been for over a year. And it may mean that the BoE choose to raise rates by just 0.25%. Or, they could be brave and not increase it at all. Only time will tell.


You will no doubt have seen in the news that UK short-term fixed mortgage rates are rising. They are now above the levels seen last autumn after the chaotic “mini-budget” issued by the Liz Truss government. These are levels not seen since the depths of the financial crisis in 2008. The average two-year fixed residential mortgage rate rose to 6.66%, according to Moneyfacts. This took the cost of two-year mortgages slightly above the peak of 6.65% set last autumn. This was when bond markets were roiled by then-Chancellor Kwasi Kwarteng’s package of unfunded tax cuts.


But a word of caution. These numbers for “average” mortgages are unhelpful. The full spectrum of every available mortgage rate are used, including those that are significantly higher for those with poor credit. They should therefore not be taken as the rate you will actually get. Of course, if you need mortgage advice, then our friends at eddge will be only too happy to help. I’d be glad to put you in touch with them.


There was some good news for the UK. The economy only marginally contracted in May as an extra bank holiday hit activity, but the decline was less steep than economists had expected. UK gross domestic product (GDP) fell 0.1% between April and May, following an expansion in the previous month. A consensus view expected a 0.3% fall.


A hot June encouraged consumers to spend a little more. Retailers reported an uptick in sales over the month as shoppers splashed out on barbecue food, swimwear, beach towels and garden furniture. The British Retail Consortium (BRC) said sales increased by 4.9% year-on-year last month, above the annual average growth rate. Much of the increase was driven by high inflation pushing up the overall value of spending, masking a drop in sales volumes. However, the figures suggest a pickup in sales from May when a trio of bank holidays failed to inspire consumers to spend.


The big news

The big piece of news for markets to cheer was the fact the Fed’s interest-rate medicine appears to be working. The latest consumer price index (CPI) inflation figures increased 3% annually in June. This was the smallest increase since March 2021 and down from a four-decade high of 9.1% in June 2022. However, the central bank is maintaining its hawkish stance and further rate rises are expected later this year.


US jobs growth slowed last month. This points to a sign that the weight of higher interest rates may be starting to slow the world's largest economy. Employers added 209,000 jobs in June, the smallest gain in more than two years, the Labor Department said. That was fewer than expected. However the unemployment rate still fell to 3.6%, down from 3.7% in May, with wage growth stronger than expected. The labour market is being watched closely, as the US central bank lifts borrowing costs to fight inflation.


Meanwhile, over in China, they are fretting about deflation. The country’s producer prices fell at their fastest pace in over seven years in June. While consumer prices teetered on the edge of a fall, coming in at 0.0%. China’s consumer prices will likely decline in July before recovering, Liu Guoqiang, deputy governor of the People’s Bank of China, said on Friday. It is likely that Beijing will launch further stimulus measures to kick-start demand.

chat gpt.jpg


Perennial newsmaker Elon Musk unveiled his new AI start-up last week, called xAI. The billionaire has previously stated he believes developments in AI should be paused and that the sector needs regulation. It is unclear how much funding or what areas the company’s focus will be. Mr Musk was one of the original backers of OpenAI, which went on to create ChatGPT.  But he is no longer involved and has criticised ChatGPT for having a “liberal bias”.


US regulators are looking at OpenAI over the risks to consumers from false information generated by ChatGPT. The Federal Trade Commission (FTC) sent a letter to the Microsoft-backed business requesting information on how it addresses risks to people's reputations. OpenAI chief executive Sam Altman says the company will work with the FTC.



Arm Holdings, the UK-nurtured chip group that now plans to list in New York, is in discussions with Nvidia over it becoming an “anchor investor”. This is ahead of its initial public offering (IPO) later this year. Nvidia has led the bull charge in US technology stocks this year due to its association with AI. The Financial Times reported that the two groups were negotiating over valuation.  Nvidia would prefer a stake that would value Softbank-owned Arm at between $35bn to $45bn with Arm’s management seeking a valuation closer to $80bn. The flotation could happen as soon as September.


Microsoft won a stunning courtroom victory over US regulators trying to block its acquisition of video game maker Activision Blizzard. The ruling breathed life into the potential $75bn deal which many had come to believe would be blocked on competition grounds. However, a US judge rejected a request from US regulators to block the deal. The Federal Trade Commission (FTC) wanted to block the deal, which is due to close later this month, while it challenged the plans. After the ruling, the UK’s Competition and Markets Authority, the only agency in the world to have formally blocked the deal, started to backtrack. It has agreed with the companies to put the legal battle over the decision on hold. The tech giant's merger with the Call of Duty owner would be the biggest deal of its kind in gaming industry history.

bottom of page