The noise
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UK consumer confidence has bounced back in August as inflation showed signs of slowing down and record high wage growth boosted household finances. Market research company GfK reported a five-point increase in consumer sentiment to minus 25 this month, this recovery almost entirely offsetting the decline observed in July. The data beat estimates and shows a remarkable improvement in consumer confidence vs one year ago as the UK approaches peak interest rates.
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The BRICS (Brazil, Russia, India, China & South Africa) group of emerging economies has announced the admission of six new members at a summit in Johannesburg on Thursday. The new members, Iran, Saudi Arabia, Egypt, Argentina, the UAE and Ethiopia will join from the start of 2024 as the group attempts to provide an economic counterweight to the US and its western allies. The move also signals the determination of the Middle Eastern nations to enhance their global status as midsized powers. .
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General Motors plan to accelerate affordable vehicle batteries by conducting a $60 million Series B financing round in Mitra Chem, a Silicon Valley AI-enabled battery materials innovator. Amid efforts to build a US focused battery supply chain, the CEO of Mitra Chem is dedicated to developing iron–based cathode materials that can power electric vehicles and grid-scale electrified energy storage. The investment by General Motors will help to accelerate the commercialisation of affordable electric vehicle batteries.
The numbers
GBP Performance to 24/08/2023
|
Equity GBP Total Return
|
1 Week
|
YTD
|
|
MSCI ACWI
|
1.3%
|
7.7%
|
|
MSCI USA
|
1.2%
|
10.3%
|
|
MSCI Europe
|
0.8%
|
6.1%
|
|
MSCI UK
|
0.6%
|
1.5%
|
|
MSCI Japan
|
2.9%
|
6.8%
|
|
MSCI Asia Pacific ex Japan
|
1.7%
|
-2.6%
|
|
MSCI Emerging Markets
|
2.0%
|
0.4%
|
|
MSCI EAFE
|
1.3%
|
4.8%
|
|
Fixed income GBP Total Return
|
|
|
Global Aggregate
|
0.6%
|
1.7%
|
|
Global Treasury
|
0.6%
|
1.8%
|
|
Global Investment Grade Hedged
|
0.7%
|
1.9%
|
|
Global High Yield hedged
|
0.4%
|
5.2%
|
|
Currency moves
|
|
|
|
GBP vs USD
|
-1.1%
|
4.3%
|
|
GBP vs EUR
|
-0.6%
|
3.2%
|
|
GBP vs JPY
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-1.2%
|
16.0%
|
|
Commodities GBP return
|
|
|
Gold
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2.6%
|
0.9%
|
|
Oil
|
0.0%
|
-3.3%
|
Source: Bloomberg, data as at 24/08/2023
The nuance
Despite some positive signs for the UK economy after consumer confidence rebounded in August, new recession fears have creeped in after a sharp fall in private sector output. The S&P Global / CIPS Flash UK Purchasing managers index recorded its lowest reading since January 2021 when Covid-19 cases peaked and ended a six-month period of business activity expansion.
The UK borrowed less than expected in July according to official data published on Tuesday. Excluding state-owned banks, net borrowing totalled £4.3 billion which was below the consensus estimate of £5 billion and has prompted calls for the government to cut taxes. Although lower taxes sound great, economists have warned that an economic slowdown or recession could be on the cards in the coming months as the Bank of England continues to hike interest rates to fight inflation. Should the government cut taxes, they would be employing stimulative fiscal policy at a time when the Bank of England is being restrictive, which could undo some of its hard work.
All investment views are presented for information only and are not a personal recommendation to buy or sell. Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by atomos. Any expressions of opinion are subject to change without notice.