Want to stay informed with market insights and investing ideas from Morningstar? Sign up for our weekly Investor Focus newsletter here.
In this week’s newsletter:
- What Andy Burnham Means for Your Pension
- GBP Falls on Burnham By-Election Win
- How Much Lower Can Oil Prices Go on the Iran Peace Deal?
- Bank of England Holds Interest Rates, Warns of Rising Inflation
- UK Inflation Lower Than Expected
- Tank Maker KNDS: Will the Next Big Defense IPO Be Delayed?
- SpaceX and What it Means for Indexes
Andy Burnham says his crucial by-election win in Makerfield is the Labour Party’s “final chance” to change course before it loses the support of the UK electorate. One way of keeping voters onside may be the triple lock pension commitment and the likely new UK prime minister has already pledged to keep it.
While UK stocks fell and the pound weakened after the by-election result, there was no market panic though. That may be the calm before the storm. The same may be said for the UK economy, which beat expectations on two counts this week: firstly via lower-than-forecast inflation, and secondly via lower-than-anticipated unemployment. The good news may not last long.
While the odds of a Bank of England interest rate rise were low this week, the announcement still triggered much speculation, as Christian Mayes’ reaction piece shows. In what one economist called a “deliberately anodyne” statement, the UK’s central played it safe, saying inflation will rise then peak just above 3%. One MPC member still called for a “proactive” hike to curb future inflation. Futures markets suggest no change this year but some analysts still see the risk of a hike.
Energy prices remain key to inflation in European. While the peace deal holds for now, experts still expect the repercussions of the US-Iran war to feed into higher inflation in the coming months: The Ofgem energy price cap will rise again from July 1, and energy demand will rise again in the second half of the year as the seasons change. After rocketing in March, just how low the oil price goes in the next six months is the subject of much discussion. Read Karen Gilchrist’s analysis of this key economic theme here.
Missing SpaceX content? A week after the much-hyped IPO, Zachary Evens analyzes the impact on indexes, which are taking a different approach to including the Elon Musk space company.
Closer to home, Karen Gilchrist looks at Europe’s next big defense IPO, tank maker KNDS. One of the issues potential UK prime minister Burnham is already facing is how he will solve the UK’s defense funding crisis, which has already claimed one defense minister. Are so-called “war bonds” the answer?
Next week, expect more on the triple lock, the UK’s M&A opportunities and AI winners, as well as venture capital trusts.
Ollie Smith, Senior Editor
