Our latest monthly investment & market update for January 2024 examines how the global investment markets, economy, and commodities perform.

UK Market Rebound

The FTSE 100 index of leading UK company shares closed at the end of December at 7733.24, up 279.49 points or 3.75% during the month.

In 2023, global financial markets outperformed pessimistic forecasts. Stock markets experienced a rebound, and bond markets recovered from early losses, buoyed by optimism that the US would manage a mild economic slowdown.

Significant stock indices worldwide saw double-digit growth, mainly due to a surge in November and December.

This surge was driven by decreasing inflation and anticipation of a potential interest rate decrease in 2024.

However, the UK’s FTSE 100 showed modest growth, increasing by less than 4% over the year.

The UK economy is expected to dodge a recession in 2024 and gain momentum in the latter half of the year. This improvement is anticipated as consumers experience relief from declining inflation and the easing of the prolonged cost-of-living crisis.

US Market

The investment & market update for January 2024  showed that the US high borrowing costs initially led investors to predict a decrease in corporate earnings and a potential US recession.

Contrary to these expectations, the US economy remained resilient, with interest rates reaching their highest in 22 years without triggering a downturn.

This resilience was underscored by stronger-than-expected economic growth and near-record US corporate profits in the third quarter.

Despite ongoing geopolitical tensions impacting the markets, sectors related to artificial intelligence witnessed significant growth as investors recognised the technology’s potential.

The robust performance of the US economy in 2023 alleviated some concerns about China’s economic recovery and the sluggish European economy, which was close to recession at year-end.

Productivity Challenges

Influential business leaders and analysts point to inadequate middle management as a key factor hampering the UK’s economic productivity.

Leading companies, including FTSE 100’s Phoenix, have identified weak middle management as a major obstacle. The Resolution Foundation, an economic think-tank, also highlights this issue as a particularly notable problem in Britain on a global scale.

Phoenix oversees Standard Life and conducts annual reviews to assess if their divisions can maintain output with 3% fewer resources. This highlights concerns about management efficiency.

Bank Stocks Plummet

In 2023, UK high street bank stocks, including Barclays, NatWest, Virgin Money, and Metro Bank, resulted in a £7 billion loss for investors due to increasing doubts about the future profitability of these financial institutions.

All four banks struggled throughout the year. Notably, NatWest, involved in the Nigel Farage debanking controversy, saw a significant decline, with its share value plummeting by 20%, erasing approximately £4.6 billion in market value.

Barclays also experienced a decrease in share value, leading to an approximate £1.5 billion loss for its investors. Lloyds Bank’s shares remained stagnant, failing to register any notable gains.

The situation was particularly challenging for smaller banks such as Virgin Money and Metro Bank. Metro Bank’s value dramatically declined following an emergency rescue deal, while Virgin Money could not recover its share price.

Collectively, the market capitalisation of these four banks diminished by £7 billion, reflecting a challenging year for the sector.

Energy Price Hike

The New Year brings an increase in domestic energy costs for households in England, Wales, and Scotland. This change, driven by a higher price cap set by Ofgem, will see gas and electricity prices rise by 5% compared to the last quarter.

For a typical household, this means an annual increase of about £94 in energy bills. However, forecasts predict a significant decrease in energy prices in the coming spring.

Advocacy groups highlight the strain this cost increase places on family budgets, especially considering January’s typical surge in debt-related issues following holiday expenditures. This year is expected to follow this trend.

In response, the government has mentioned its commitment to assisting households through measures like cost-of-living payments.

Mortgage Transaction Drop

According to Nationwide, UK house prices ended the year 1.8% lower, with no growth or a potential further decline anticipated in 2024.

The average house price in December stood at £257,443, remaining stable from November but decreasing from the previous year.

Nationwide points out that consumer confidence is still low, even though some mortgage rates have begun to decrease in anticipation of potential cuts in borrowing costs by the Bank of England.

The number of housing transactions is currently about 10% lower than pre-COVID levels. This decline is more noticeable among buyers using mortgages, which have dropped by 20% compared to pre-pandemic figures.

On the other hand, the volume of transactions made in cash has continued to exceed pre-COVID levels, indicating a shift in the types of transactions occurring in the housing market.

Is your mortgage deal due to expire-what you need to know

UK Property

The Investment & Market Update January 2024 showed fluctuations and Shifting Sands for the mortgage market in 2024. The market promises a rollercoaster ride, with house prices and mortgage rates poised for potential twists and turns after a year of dizzying fluctuations.

Despite official data confirming the first annual house price dip in a decade back in September, recent months have seen a surprising surge in demand.

This newfound buzz throws the new year’s housing landscape into murky territory, leaving prospective buyers wondering: Is it buy now or wait it out?

“The outlook is not as bleak as last year,” says Neal Hudson of BuiltPlace, the UK housing research company. “Local markets and property types will matter significantly. While competition is strong for smaller homes, larger ones face slower sales due to tighter mortgage constraints.”

In short, the UK housing market in 2024 will be a mixed bag. While uncertainties remain, first-time buyers could find opportunities, and careful consideration of location and property type will be key for all in this dynamic landscape.