This month, all eyes and ears are on the budget. As the UK gears up for the Chancellor's announcement on 30th October, the stakes are high. The government is walking a tightrope, aiming to boost economic growth and tame inflation - all while tackling the £22billion 'black hole' in public finances. But what does this mean for you and your financial future? 

In this newsletter, we break down the key areas of focus and expert predictions that could shape the future of the UK economy.

This month marks pivotal changes in global markets, with both the Federal Reserve and the European Central Bank cutting interest rates in response to easing inflation. While conventional wisdom suggests that stocks tend to benefit from rate cuts, history reveals mixed results.

2024 has seen new highs for US markets, with the S&P 500 closing above 5,000 for the first time in February, followed by the Nasdaq hitting a new milestone of 17,000. The Dow is crossing into 40,000 a few months later in May. These Indices have been leaving a trail of record highs throughout the year, raising a widespread dilemma for people. Is this trend of record highs just the start of a more extended period of bullish markets, or is it a sign that markets are due to drop? 

The result of the 2024 General Election saw Keir Starmer's Labour Party win a majority for the first time since 2010. In this months hot topics, we take a look at some of their promises and how they might impact the UK financially.

It's natural for people to look for a link between the outcomes of political elections and what will happen with the stock market. There will be 64 national elections in 2024 globally (with some already taking place). Most people focus on the UK and the US general elections. 

On 21 March 2024, HMRC published their monthly receipts for the last four tax years. Included in this they shared the following graph reflecting the inheritance tax received over this period. 

In March, Jeremy Hunt announced as part of his Spring Budget, that there would be a new British ISA introduced to sit alongside the existing 4 other ISAs available in the UK (cash ISA, Stocks & Shares ISA, Innovative Finance ISA and Lifetime ISA). The unique attribute to this ISA is that it can add an additional £5,000 on top of your £20,000 annual allowance limit, however, this will solely be investing in UK companies.

At the start of February, the S&P500 finished above 5000 points for the first time in its history, following a 20% rally that started in early November. Spirits are high in the US with the recent economy showing resilience, with low unemployment, inflation largely under control, and the sense that the Federal Reserve will deliver the illusive ‘soft-landing’. 

2023 was a year of heightened uncertainty, from rising inflation and interest rates to a potential banking collapse and fears of rising oil prices due a war in the middle east, anyone would have thought that 2023 would be a continuation of 2022. However, equities prevailed with the MSCI World (the global stock index) returning 15.3% over the course of 2023.

Equity and bond markets concluded 2023 strong, following positive economic data in November that indicated inflation was declining across developed markets, and the economic moderation in the US and the UK was not as bad as had been feared. This was further backed by a positive decline in commodity prices, despite the ongoing conflict in the Middle East. The price of a barrel of crude oil fell to $80, thanks to an increase in US supply and OPEC+ members’ failure to adhere to production quotas.

2023 was expected by most, to be a better year for investment markets, but a bad year for the economy. This has somewhat been the case, however, the latter has not been with most economies appearing more resilient than expected. UK GDP is surprisingly on the upside, having risen 0.2% over the quarter, when the market consensus was in fact for the economy to have flat lined. Combined with inflation surprisingly falling to 6.7%, the lowest rate since February 2022, this was enough to see the Bank of England hold interest rates for the first time since December 2021.

We finished the first quarter with a market sell-off as the fear of another financial crisis arose due to Silicon Valley Bank going bust. However, these fears were short-lived as we witnessed equities and bonds bounce back. This was led by big growth stocks such as Nvidia and Tesla producing triple digit returns year to date, driven partly by the overly positive sentiment around artificial intelligence.

Both equities and bonds were broadly positive over the quarter, although volatility remained elevated as several headline-grabbing news stories occurred. 

We saw Silicon Valley Bank (SVB) collapse spook investors in March as fears of another banking crisis rose. However, it is clear to see that lessons have been learnt from the financial crisis in 2008. We saw equity markets start to recover as the fear of another banking crisis subsided, and central banks stepped in to protect customers.