Investment & Economic Update September 2022 looks at how the global investment markets, economy, and commodities perform.
UK
The FTSE 100 index of leading UK company shares closed at the end of August at 7,284.15 points, down 166.09 points or 2.23% during the month.
The index started September with investors in a pessimistic mood, following European stock markets lower due to recession fears.
The Resolution Foundation published new forecasts showing the number of people living in absolute poverty in the UK could rise by 3 million, reaching 14 million in 2023/24.
Real household disposable income is expected to decline by 10% by the end of next year.
Pound Sterling also fell against the US Dollar, falling to its lowest level since the crash at the onset of the Covid-19 pandemic in March 2020.
August was the worst month for Sterling versus the Dollar since October 2016.
Former Chancellor and Prime Minister hopeful Rishi Sunak warned that it would be “complacent and irresponsible” to ignore the risks of global financial markets losing confidence in the UK economy.
Ryanair chief executive Michael O’Leary has warned that a “deep, dark recession” is looming over households and businesses. Speaking at a conference, he said:
“There is going to be a deep, dark recession, particularly here in the UK, driven by the high cost of energy.
“I think the consumer price inflation is going to be nothing compared to the energy shocks coming this winter.”
Goldman Sachs published a forecast for UK inflation that saw a possibility of it peaking at 22% next year, although stressed this was not their ‘base case’.
They did, however, note that risks to the UK economy were skewed to the downside, with a “more severe and protracted recession” more likely than a prompt recovery.
Property
Investment & Economic Update September 2022, showed the latest house price data from lender Nationwide show a slowdown in August, despite annual growth remaining in double digits.
Annual growth slowed to 10% last month, down from 11% in July.
Average house prices rose 0.8% month-on-month, with the 13th consecutive month of average price rises.
House price growth remains supported by supply lower than demand, with Nationwide expecting a further slowdown due to living cost pressures.
Are house prices about to slow down?
Oil
Oil prices fell at the start of September over fears about lower demand and pressure from renewed Covid restrictions in China.
Brent crude futures started the month at $94.84 a barrel, with US West Texas Intermediate crude futures at $88.70.
Hiroyuki Kikukawa, general manager of research at Nissan Securities, said: “Growing fears over weakening fuel demand due to aggressive rate hikes by the US and European central banks outweighed concerns over tight global supply.”
