Update your operating system
Your computer’s operating system is out of date. To get the best experience of our website and enhanced security, please update your operating system.
Home Markets Global
Published 12 December 2022
Fidelity International
Important information – the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
SO much for a quiet run in to Christmas. The penultimate week before the holiday season is shaping up to be a cracker, with central banks firmly in the spotlight.
Rates round up
The big three – Federal Reserve, European Central Bank and Bank of England – are all in action this week, unveiling the final rate hikes of 2022. First out of the blocks will be the Fed, on Wednesday. And all eyes are on whether Jay Powell will, as expected, call time on the string of jumbo 0.75 percentage point rate hikes that have dramatically curtailed the era of zero interest rates this year.
Mr Powell has hinted that the time might be right to slow the rate of tightening, but he has been careful to leave the door open to a string of smaller hikes through the first half of 2023 and not to rule out rates staying higher for longer after the peak is finally reached.
Here in the UK and in Europe, the chill winds of recession are blowing harder than over the pond so smaller hikes look certain. But that doesn’t mean we are out of the woods yet. With inflation standing at around five times the Bank of England’s target, and with energy prices and wage hikes still a worry, the central banks’ job is not yet done.
Data dependent
All three banks are watching the data closely to decide how much they’ve already achieved with 2022’s string of rate hikes. So far, there’s scant evidence that monetary tightening has had the desired effect. Today’s GDP figure for October here in the UK was hotter than expected as we bounced back from September’s royal funeral, up 0.5% month on month.
There’s inflation data in all three regions this week, too. And while the UK’s rate of price rises is likely to fall back from the recent peak of 11.1%, it’s still going to be uncomfortably in double digits.
How are markets positioned?
The Santa Rally paused for breath last week on the back of stronger than expected producer price data and service sector activity in the States. The S&P 500 gave back 3.4% of its recent recovery and the tech-heavy Nasdaq was 4% off last week.
Bonds also eased back after their recent strength as investors started to price in slightly more hawkish expectations for central banks. But the stand-out declines were reserved for the oil market where fears of a recession in 2023 are starting to overwhelm supply fears.
The cost of a barrel of Brent crude has fallen to $76 from highs of well over $100 a barrel in the summer as traders factor in lower demand in all the main industrialised regions, including the US and China, and healthy supply despite Russia’s sabre-rattling this week.
Although President Putin has lashed out at the implementation of sanctions and a price cap on Russian oil, smaller members of OPEC are struggling to meet their existing quotas, which makes it difficult for the oil cartel’s recent supply cuts to stick.
Important information – investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
Share this article
Get daily views, insights and content to keep your finger on the pulse.
UK house prices have seen their biggest monthly fall since June 2020
Nafeesa Zaman
Fidelity International
13 December 2022
What’s driving your investments this week?
Tom Stevenson
Fidelity International
12 December 2022
What’s driving your investments this week?
Tom Stevenson
Fidelity International
12 December 2022
Get the latest share prices, market data, news, factsheets and performance charts for FTSE companies.
Search through the thousands of investments we offer with our powerful investment finder tool.
Our team of advisers can help you achieve your investment goals, whether those relate to one-off events or more complex needs with ongoing support.
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.
© FIL Limited 2022
Fidelity uses cookies to provide you with the best possible online experience. If you continue without changing your settings, we’ll assume that you are happy to receive all cookies on our site. However, you can change the cookie settings and view our cookie policy at any time.