Sponsored Content Andrew Gillham of Team Asset Management offers this week’s market review Stock markets endured their worst week in two months as investors tried but failed to climb a wall of worry headlined by geo-politics, company earnings and precarious government finances, put under the spotlight during the UK government’s autumn budget. The blue-chip S&P500 fell 1.9% and the technology-focused Nasdaq index retreated 2.
1% from a record high set last week. While it seemed much had been leaked in the run-up to the Labour government’s first budget in 14 years, the reaction to the “tax and spend” measures suggests that there were some nasty surprises that were not expected. The Office for Budget Responsibility labelled the additional £140 billion of borrowing over the next five years as “one of the largest fiscal loosenings of any fiscal event in recent decades” with the sales of UK government bonds expected to reach £300 billion this year to cover the shortfall in government revenues versus their spending commitments.
The spike in UK government bond yields to their highest levels this year, however, cannot solely be attributed to the budget, with external factors also in play, led by a firming of the “Trump Trade” in the run-up to the US elections. The former president is expected to pursue lower taxes and higher tariffs if re-elected, both of which risk fuelling inflation. Away from politics, it was a big week for third-quarter corporate earnings report.
