Weekly Market Update – 10/05/24
It was a positive week in global financial markets, with all of the major indices making headway. US futures pointed to more gains on Friday, leaving the S&P 500 index on course for a third consecutive weekly rise. The rally was given fresh impetus yesterday by data that supported the case for Federal Reserve interest rate cuts, but the real test will come next week with a key US inflation print due.
At Thursday’s meeting, the Bank of England (BoE) held the base rate at 5.25%. This was consistent with market expectations and the committee vote remained split two ways. A slightly more dovish tone was noted with with 7 members voting to hold the base rate steady vs 2 members calling for a 25 basis point cut – the previous voting split was 8:1 in favour of no change. In addition, the 2-year and 3-year CPI forecasts were also revised down to 1.9% and 1.6%, from 2.3% and 2.2%, respectively.
Market expectations are for the first UK rate cut to materialise over the summer months as inflation heads closer to the 2% target. BoE governor, Andrew Bailey, on Thursday said a rate cut at the Monetary Policy Committee’s (MPC) next meeting was neither “ruled out” nor a “fait accompli”. He added the MPC now expected underlying inflationary pressures to fade “slightly faster” than previously assumed.
The next interest rate decision will be announced following the MPC’s June 20th meeting.
Andrea Wood, Chartered MCSI
Investment Manager
