A challenging week brings investors back down to earth

Overall, UK bond and equity markets slipped back last week, despite the FTSE 100 edging higher until Thursday lunchtime when it reached a new all-time price high. Since the previous week’s US employment data, the asset market rally has had a key component weaken. In January and early February, investors had spied a decline in longer-term inflation pressures, but investors have become less sure in recent days. In turn, expectations that central banks would move relatively quickly into neutral gear also declined. Catherine Mann, an independent member of the Bank of England’s Monetary Policy Committee, warned that there were still more rate rises to come in the UK. Meanwhile, in the US, Federal Open Markets Committee members also told us that while the pace of rate rises may have slowed, the end is not clearly in sight.


Natural disaster hits Türkiye’s economy too

In the wake of tragedy, talking about the economy can sound a little callous. The earthquake in Türkiye and Syria has tragically killed more than 21,000 people, and injured tens of thousands more. The scale of the devastation is not yet clear, but the real toll will likely be much higher, with hundreds of thousands displaced from their homes. Unfortunately, the global financial system does not stop to mourn. In the wake of the disaster, international investors sold Türkiye’s Bist 100 Index at a rapid pace, culminating in a 7% fall last Wednesday morning. The negativity caused stock trading to be suspended for a five-day period and reflects deep concerns over the hit to Türkiye’s productive capacity.


Will trade die with the WTO?

The 1990s was a decade of hope and hubris. After the Fall of Communism, western politicians and intellectuals not only celebrated their Cold War victory but promised an era of unparalleled global growth and peace – guaranteed by the so-called ‘golden arches’ theory of international relations. The idea was that, if two countries can each support a network of McDonald’s restaurants, they would have no interest in going to war with each other. Trade brings nations (their businesses and consumers) together, meaning everyone has too much to lose by killing one another.


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