Interest Rates and Inflation Continue to Plague the Global Markets Whilst Japan Makes Headway

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UK & Europe: Interest Rates Up

The UK had a big week, with both inflation announcements and interest rate decisions taking centre stage.

First up, inflation. Data showed that it remained stubbornly flat for the month of May, remaining at 8.7%. 

And it’s not just food or energy prices to blame for rising prices, but also services like restaurants, hairdressers and chiropractors which are also shooting their prices up.

Consequently the following day, the Bank of England decided on a 0.5% interest rate rise, rather than just a smaller 0.25%. The total rate is now at 5%. 

Markets responded with suitable levels of grumpiness about the state of the economy, with the FTSE 100 ending the week down by over 2%. 

European stocks weren’t looking much more optimistic, as the UK news failed to give confidence to other markets. 

To round it all off, Switzerland and Norway also hiked their interest rates. 

Americas: Hawkish Noises

US markets were ‘hawkish’ last week, meaning that they’re favouring interest rate increases in an attempt to curb inflation. 

Jerome Powell, the chairman of the US Federal Reserve Bank, made an announcement warning that there was still a need to raise interest rates before the end of the year. Most of the markets had been waiting for this guidance and subsequently slumped in disappointment.

The bottom line being that there will be more interest rate hikes, and maybe even a recession. That being said, markets are still on the up!

Asia & Australasia: Stimulating Measures

Much like the rest of the world, markets across the Asia Pacific region were very subdued for the week. 

Japan was hit by the news that their inflation was higher than expected for the month of May, although many globally might be envious of the 3.2% figure that it was revealed to be. 

Many high profile investors are continuing to sing the praises of Japan, as they anticipate growth not seen in the country for nearly 30 years. 

The changes to corporate governance within many Japanese companies seems to be attracting foreign investors, driving markets in a positive direction (albeit not this week). 

China also joined the UK in making surprise interest rate decisions, by hiking their loan prime rates (LPRs) in further efforts to stimulate the economy. 

The stimulating methods did little to stimulate and the markets closed the week down. 

Stock World: EVs and Energy

US-based electric vehicle maker, Rivian, saw their shares soar after announcing that they would make charging compatibility with Tesla. 

As Tesla has a much broader range of charging stations, many investors now see the Rivian vehicle as much more attractive. 

However, German based Siemens saw stock prices tumble by over 30%, wiping one third off their market value after an earnings announcement. 

This earnings announcement detailed the issues with their wind turbines, which may take over $1 billion to fix.