Last week’s big pullback in global equities has hurt investor sentiment and triggered a ‘wait and see’ approach among many people who have become nervous about deploying more money in the markets until there is more clarity on the next central bank interest rate decisions.
Russ Mould, investment director at AJ Bell, said: “It seems likely the Federal Reserve, ECB and Bank of England will continue to raise rates in the fight against inflation. Labour markets are holding up better than expected and plenty of businesses continue to grow profits. However, the more rates go up, the bigger the risk of a hard landing – reaching the point where a lot more consumers and businesses cannot cope with the higher cost of borrowing and we suddenly see a slump in the economy.
“While Asian markets pressed forward in most locations apart from Japan, European markets saw a small pullback, including a 0.1% dip in the FTSE 100. Strength on the UK market from energy and healthcare stocks wasn’t enough to fully offset weakness in miners, real estate and financials.
“News of a £750 million cash injection in Thames Water provided some relief to the broader water utilities sector, with Severn Trent and United Utilities topping the FTSE 100 leaderboard.”