Headline writers must be rubbing their hands together with glee at the incredibly bad timing of the Chancellor’s next economic update. His last ‘budget’ created an horrific market meltdown so the prospect of his mid-term fiscal plan being delivered on Halloween is just too ironic. But will there be tricks or treats in store for cash-strapped households and spooked investors?
Beyond the gags, there’s good reason to bring forward the event which will come complete with an independent assessment of the state of the UK economy by the OBR. It will land days before the Bank of England is set to deliver its next interest rate decision and at the moment markets are split on which way things will go with slightly higher odds being given to a 1% hike over a 1.25% hike. Whether the ‘fiscal event’ does anything to alter that trajectory seems unlikely, but a glut of economic data beginning with tomorrow’s jobs figures will undoubtedly play into the decision-making process.
Danni Hewson, AJ Bell financial analyst, said: “In the US it’s inflation which is once again in the spotlight as investors await this week’s update. The headline rate is expected to have fallen once again and any shocks will further scare markets, and on top of that this week sees earnings season get underway once again. This time last year outlooks were warning that inflation was waiting to take a big bite out of margins, but back in 2021 investors were bullish. Fast-forward 12 months and there are still niggling doubts about exactly how much bad news might be on the cards and how much investors have really priced in.
“Volatility really must be the word of the year for 2022 and today has brought no reprieve. Apparent ‘revenge attacks’ on Ukrainian cities has pushed the conflict front and centre once again, with a long, hard winter now firmly on the cards and real concern about exactly how the situation might be resolved.
“Confidence is tenuous and even without fears over the escalating conflict there’s more than enough to keep investors on their toes. Tech stocks took a beating after the White House announced export controls, which are likely to impact more businesses than just the Chinese chip sector.
“There have been some glimmers of good news to grab onto today, with packaging company DS Smith enjoying double digit gains after lifting annual guidance and positive momentum from Hollywood Bowl which has smashed expectations despite the cost-of-living crisis battering the hospitality sector. Its offer of affordable fun has helped woo customers, proving that even in the worst of times the right offer at the right price can prove triumphant.”