Weekly Market Update – 24/05/2024
The country was caught by surprise on Wednesday, when Prime Minister Rishi Sunak announced a snap election on 4th July, months earlier than the anticipated Autumn timescale. Some within the Conservative party have criticised the timing whilst the Tories are currently so far behind in the polls, and that Sunak has not given the economic recovery time to trickle through to voters.
However, chancellor Jeremy Hunt had warned that waiting until the Autumn may not bring the economic cheer others were hoping for, and the public finances would not be able to withstand further tax cuts. Others have spoken of their excitement, with housing minister Michael Gove very openly showing his support.
Also on Wednesday, the Office for National Statistics announced inflation in April fell to 2.3%, closing in on the government’s 2.0% target. However, with the figure expected to come in at 2.1%, economists no longer expect the Bank of England to decrease rates at the meeting in June, as inflation continues to prove stubborn. MPC members will want proof of a sustained reduction in price pressures before they cut rates.
British retail sales fell 2.3% in April according to figures from the ONS, as wet weather reduced footfall on the high street. Some analysts say however that this fall may be attributed to consumers still struggling with elevated prices and borrowing costs. This comes when separately published data from research company GfK shows consumer confidence is at its highest in two years, although still well below pre-pandemic levels.
Across the pond, Nvidia announced that record sales of AI chips sent revenues soaring some 262% in the last quarter. Demand for Nvidia’s chips continues to rise as the world’s biggest tech companies compete to develop their computing infrastructure to harness the power of AI. Google, Microsoft, Meta, and Amazon have all indicated their spending in this area would remain high throughout the remainder of 2024. At the time of writing, Nvidia shares are up 115% year to date.
Andrea Wood, Chartered MCSI
Investment Manager
