Providing you with a short summary of events from around the world ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Blackfinch Group
Monday Market Update

The ever-changing world we live in reinforces the importance
of regular up-to-date communication. This weekly news update from our
multi-asset portfolio managers provides you with a summary of global events
 for your reference and to share with clients.

Issue 147 | 19th June, 2023 

UK COMMENTARY

  • UK gross domestic product (GDP) – as reported by the Office for National Statistics (ONS) – increased by 0.2% in April following the 0.3% contraction in March.
  • The services sector grew by 0.3% overall, and was the main contributor to the positive number. Consumer-facing services (which includes food and beverage serving activities, travel and transport, and entertainment) grew by 1.0% in April, following a fall of 0.8% in March. However, production output fell by 0.3%, while construction sector output dropped by 0.6%.
  • The average rate on a two-year fixed rate mortgage in the UK increased to more than 6.0%, up from 5.26% at the start of May. This is a level last seen after the chaos of the mini budget in September 2022.
  • The ONS reported the UK unemployment rate for February to April increased to 3.8%, up from 3.7% in the previous quarter but down on the 3.9% reported last month.
  • UK wage growth continued to strengthen in the February-April quarter, prolonging the Bank of England’s difficulties in trying to cool inflation without causing significant economic contraction. Regular pay (excluding bonuses) rose by 7.2% per year in the quarter according to the ONS, up from 6.6% in the November-January period.

NORTH AMERICA COMMENTARY

  • The US Labor Department reported that inflation, as measured by the Consumer Prices Index (CPI), dropped to an annual rate of 4% in May. This was the lowest reading since March 2021, and down from April’s 4.9%.
  • US core inflation, which removes the volatile food and energy components, fell to an annual rate of 5.3%, down from 5.5% in April. US energy prices were 11.7% lower in May than a year ago, while the food prices index increased 6.7%.
  • The US Labor Department also reported that the Producer Price Index (PPI), which records the ‘final demand’ prices charged for consumption by goods makers and service providers, fell by 0.3% in May, suggestion inflation ‘stickiness’ had subsided somewhat. The fall was largely due to a 1.6% drop in prices charged for goods such as energy, while services prices rose 0.2% in the month.

EUROPE COMMENTARY

  • The European Central Bank (ECB) voted to raise its three key interest rates by 25 basis points, with the main refinancing rate for operations rising to 4.0%.
  • The marginal lending facility (used by commercial banks for short-term borrowing from the ECB) was raised to 4.25%, while the deposit facility rate (paid on commercial bank deposits left at the ECB) moved to 3.5%.
  • Eurozone inflation was recorded at 6.1% for the year to May, down from 7.0% in April, but three times higher than its medium-term target of 2%.

ASIA COMMENTARY

  • China’s central bank, the People’s Bank of China (PBoC), lowered its medium-term borrowing costs for the first time in ten months, in an attempt to protect its economy from a potentially sharp downturn. The PBoC reduced the rate on one-year medium-term lending facility (MLF) loans by 0.1% to 2.65%.

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