{"id":2578,"date":"2021-05-19T17:19:42","date_gmt":"2021-05-19T17:19:42","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2578"},"modified":"2021-05-19T17:19:42","modified_gmt":"2021-05-19T17:19:42","slug":"market-update-19th-may-2021","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2021\/05\/19\/market-update-19th-may-2021\/","title":{"rendered":"Market Update \u2013 19th May 2021."},"content":{"rendered":"
[vc_row][vc_column][vc_raw_html]JTNDaWZyYW1lJTIwd2lkdGglM0QlMjI1NjAlMjIlMjBoZWlnaHQlM0QlMjIzMTUlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRnd3dy55b3V0dWJlLmNvbSUyRmVtYmVkJTJGblc3MkNaWllMWHMlM0ZyZWwlM0QwJTIyJTIwdGl0bGUlM0QlMjJZb3VUdWJlJTIwdmlkZW8lMjBwbGF5ZXIlMjIlMjBmcmFtZWJvcmRlciUzRCUyMjAlMjIlMjBhbGxvdyUzRCUyMmFjY2VsZXJvbWV0ZXIlM0IlMjBhdXRvcGxheSUzQiUyMGNsaXBib2FyZC13cml0ZSUzQiUyMGVuY3J5cHRlZC1tZWRpYSUzQiUyMGd5cm9zY29wZSUzQiUyMHBpY3R1cmUtaW4tcGljdHVyZSUyMiUyMGFsbG93ZnVsbHNjcmVlbiUzRSUzQyUyRmlmcmFtZSUzRQ==[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Last week\u2019s inflation theme remains front and centre of attention \u2013 and unfortunately, that has hurt global equity market sentiment.\u00a0 Adding to the negative vibe was news that Taiwan was introducing new restrictions given rising coronavirus cases there and across many parts of Asia.<\/p>\n

While inflation and coronavirus worries will undoubtedly keep equity market volatility elevated in the short-term, putting the humanitarian impact of the latest increase in coronavirus cases to one side, the overall outlook remains very positive.<\/p>\n

For example, here in the UK, yesterday\u2019s (Tuesday 18 May 2021) employment data was much stronger than expected, with an increase of 84,000 people in employment during the first quarter of 2021.\u00a0 Not only was this the first increase in employment since last March, but this increase in employment reduced the unemployment rate to 4.8% – which is less than 1 percentage point higher than it was before the coronavirus outbreak.<\/p>\n

Although it can be argued that the government\u2019s job retention (furlough) scheme has flattered the UK\u2019s unemployment readings, data from the Office of National Statistics (ONS) on Thursday 6 May 2021 showed that as coronavirus restrictions continued to be lifted, the proportion of businesses’ workforce on furlough fell from 17% in late March 2021 to 13% by mid-April 2021\u2013 and we would hope that many more people on furlough have been taken off this week as pubs and restaurants were allowed to serve customers inside.\u00a0 Consequently, we may see the unemployment rate fall further next month and peak at a much lower rate than we all thought possible this time last year, when the furlough scheme fully unwinds at the end of September.<\/p>\n

As for this morning\u2019s UK CPI inflation reading, the increase from 0.7% to 1.5% was fully expected \u2013 and as with the sharp jump in US CPI inflation we discussed last week, there are plenty of reasons to look past today\u2019s reading.\u00a0 As we have previously explained, \u2018base effects\u2019 were the primary cause as the price declines we experienced in 2020 drop out of the reading\u2019s calculations.\u00a0 For example, last year\u2019s petrol pump price declined dramatically when the oil price fell into negative territory; while Ofgem\u2019s price cap increase has lifted our household energy costs this year, having reduced them last year.<\/p>\n

As a result, while we will undoubtedly see UK CPI inflation rise above the BoE\u2019s 2% target in the coming months, we don\u2019t believe the BoE will react by increasing UK interest rates.<\/p>\n

Given the market\u2019s current obsession with inflation, our attention is now fully on this evening\u2019s (7pm UK time) release of the minutes from the Fed\u2019s last monetary policy meeting (which was held on 28 April 2021) – fingers-crossed there will be sufficient and soothing references to the fact that the current rise in inflation is transitory, to finally put the markets\u2019 concerns to bed.<\/p>\n

Investment Management Team<\/strong>[\/vc_column_text][\/vc_column][\/vc_row]\n <\/div> ","protected":false},"excerpt":{"rendered":"

Last week\u2019s inflation theme remains front and centre of attention \u2013 and unfortunately, that has hurt global equity market sentiment.<\/p>\n","protected":false},"author":1,"featured_media":2581,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2578"}],"collection":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/comments?post=2578"}],"version-history":[{"count":1,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2578\/revisions"}],"predecessor-version":[{"id":2580,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2578\/revisions\/2580"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media\/2581"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=2578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=2578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=2578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}