26 September 2024
If you are covering the latest news in financial markets, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“Today’s BRC data reveals a sharp decline in consumer confidence, highlighting fears over the upcoming autumn budget ‘tax axe.’
“The Consumer Sentiment Monitor shows a drop in optimism about the UK economy, with only 18% expecting improvement, down from 25%, and 40% anticipating a downturn, up from 33%.
“Weaker confidence was apparent among older generations, who are likely to see a greater impact from the upcoming budget but would have been less likely to welcome a Labour government in the first place.
“Labour has now wrapped up its annual Conference, where the party was keen to strike a more positive tone than in recent weeks. While Labour got the bad news out of the way early on with reports of the £22bn black hole of unfunded spending and subsequent in-year changes to the winter fuel allowance and VAT on private school fees, it may now seek to continue the more constructive tone or risk talking the UK back into recession.
“With no growth in June or July, and waning sentiment, the government must seek to balance its desire to manage expectations ahead of 30th October with the encouragement needed for businesses to invest, consumers to spend, and international investors to return.
China’s economic stimulus sparks rally, but investor scepticism remains high
“Following on from Tuesday’s rate cut in China and its package of property and market stimulus offerings, markets across Asia have rallied on hopes that this will be a turning point for the Chinese economy.
“The difficulty with this is that investors won’t necessarily know if it is. Economic growth data is opaque and widely mistrusted, and multinationals are leaving the country in swathes. Data that was once a good signal of investor appetite, such as foreign-investment inflows, is now published only sporadically rather than daily.
“Investors rely on heavily on data and good quality corporate access. With both now harder to come by, the efforts of the Chinese government to rightly act to stimulate what is a struggling economy are not likely to be enough to tempt foreign investors back in any size.”
