Weekly Market Update 13/12/2024
US inflation increased to 2.7% in November according to figures released on Wednesday by the Bureau of Labor Statistics; inline with analyst expectations but higher than October’s figure of 2.6%. Markets are now indicating a more than 98% chance the Federal Reserve will cut rates by 0.25 percentage points at the meeting next week. However, the outlook for rates next year is still hazy, as the central bank aims to keep inflation trending towards its 2% target whilst also maintaining the strength in the labour market.
Data released by the Office for National Statistics earlier today showed the UK economy shrunk by 0.1% in October, a stark contrast to the expected increase of 0.1%. Sterling declined 0.3% against the dollar, and the two-year gilt yield fell 0.02%. This is the third month since Labour won the general election that the UK economy has fallen, piling pressure onto the new government which put growth at the centre of its election campaign.
Royal Mail has been fined by Ofcom, the UK communications industry regulator, for the second consecutive financial year after the group failed to meet delivery targets of 93% of first-class mail delivered within one working day, and 98.5% of second-class mail delivered within three working days. The penalty of £10.5m was almost double that of the previous year’s fine of £5.6m, as the group only managed to deliver 74.7% of first-class on time and 92.7% of second-class. Royal Mail has failed to meet delivery targets every year since 2017/18, and the fine will add pressure to the impending takeover by billionaire Daniel Křetínský.
Andrea Wood, Chartered MCSI
Investment Manager
