Category: Economoney

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FTSE 100 hits new all-time high in boost for London

FTSE 100

The FTSE 100, London’s premier stock index, has recently achieved a new all-time high, closing at 8,646.88 on 30th January 2025.

This milestone marks a significant boost for the City of London, reflecting strong corporate performance, investor confidence, and favourable economic conditions.

Factors driving the surge

Several key factors have contributed to the FTSE 100’s impressive rise

  1. Strong Corporate Updates – Companies like St James’s Place and Airtel Africa have reported robust financial results, attracting investor interest. St James’s Place, for instance, saw its shares rise by over 10% after announcing it had attracted £4.3 billion in assets last year.
  2. Value Seeking – With extreme valuations of some American companies, international investors are looking for better value in London. The FTSE 100’s relatively lower price-to-earnings (P/E) ratio and high dividend yield make it an attractive option.
  3. Return of ‘Animal Instincts‘ – The market has seen a resurgence of mergers and acquisitions, driven by investor optimism and confidence in the economic outlook.
  4. Interest Rate Expectations: Hopes for further interest rate cuts by the Bank of England have also played a role in lifting the index. The European Central Bank’s recent decision to cut interest rates has further fueled investor optimism.
  5. Weaker Pound – The pound’s weakness against the U.S. dollar has benefited many FTSE 100 companies that earn a significant portion of their revenues overseas. This has boosted the relative value of their foreign earnings when converted back to sterling.

Implications for the City of London

The new high represents a significant boost for the City of London, especially amid concerns that the market was losing ground to American exchanges.

The FTSE 100’s performance highlights the resilience and attractiveness of London’s financial markets, even in the face of global economic uncertainties.

FTSE 100 new high reached 30th January 2025

FTSE 100 new high reached 30th January 2025

The return of ‘animal instincts’ had prompted more mergers and acquisitions in London, while the extreme valuations of some American companies had sent investors looking for better value elsewhere. This shift in investor sentiment underscores the importance of London’s financial markets in the global economy.

Looking Ahead

While the FTSE 100’s recent performance is encouraging, it is essential to remain cautious. Market volatility and global economic uncertainties, such as the outlook for artificial intelligence-related growth stocks and the potential impact of a Trump presidency, could influence future market movements.

Nevertheless, the FTSE 100’s new all-time high is a testament to the strength and resilience of London’s financial markets. As investors continue to seek value and stability, the FTSE 100 is well-positioned to remain a key player in the global financial landscape.

A list of the companies in the FTSE 100 as of January 2025

No.Company NameNo.Company Name
13i Group PLC51Intertek Group PLC
2Admiral Group PLC52International Consolidated Airlines Group SA
3Airtel Africa PLC53JD Sports Fashion PLC
4Alliance Witan PLC54Kingfisher PLC
5Anglo American PLC55Land Securities Group PLC
6Antofagasta PLC56Legal & General Group PLC
7Ashtead Group PLC57Lloyds Banking Group PLC
8Associated British Foods PLC58London Stock Exchange Group PLC
9AstraZeneca PLC59LondonMetric Property PLC
10Auto Trader Group PLC60M&G PLC
11Aviva PLC61Marks & Spencer Group PLC
12BAE Systems PLC62Melrose Industries PLC
13Barclays PLC63Mondi PLC
14Barratt Redrow PLC64National Grid PLC
15Beazley PLC65NatWest Group PLC
16Berkeley Group Holdings PLC66Next PLC
17BP PLC67Pearson PLC
18British American Tobacco PLC68Pershing Square Holdings Ltd
19British Land Co PLC69Persimmon PLC
20BT Group PLC70Phoenix Group Holdings PLC
21Bunzl PLC71Prudential PLC
22Centrica PLC72Reckitt Benckiser Group PLC
23Coca-Cola HBC AG73RELX PLC
24Compass Group PLC74Rentokil Initial PLC
25Convatec Group PLC75Rightmove PLC
26Croda International PLC76Rio Tinto PLC
27DCC PLC77Rolls-Royce Holdings PLC
28Diageo PLC78Sage Group PLC
29Diploma PLC79Sainsbury (J) PLC
30Easyjet PLC80Schroders PLC
31Endeavour Mining PLC81Scottish Mortgage Investment Trust PLC
32Entain PLC82Segro PLC
33Experian PLC83Severn Trent PLC
34F&C Investment Trust PLC84Shell PLC
35Fresnillo PLC85Smith & Nephew PLC
36Games Workshop Group PLC86Smith (DS) PLC
37Glencore PLC87Smiths Group PLC
38GSK PLC88Spirax-Sarco Engineering PLC
39Haleon PLC89SSE PLC
40Halma PLC90St. James’s Place PLC
41Hargreaves Lansdown PLC91Standard Chartered PLC
42Hikma Pharmaceuticals PLC92Taylor Wimpey PLC
43Hiscox Ltd93Tesco PLC
44Howden Joinery Group PLC94Unilever PLC
45HSBC Holdings PLC95Unite Group PLC
46IMI PLC96United Utilities Group PLC
47Imperial Brands PLC97Vodafone Group PLC
48Informa PLC98Weir Group PLC
49Intercontinental Hotels Group PLC99Whitbread PLC
50Intermediate Capital Group PLC100WPP PLC
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Fed holds rates steady – calculates a less confident view on inflation

Federal Reserve

The Federal Reserve maintained its key interest rate on Wednesday 29th January 2025, reversing a recent trend of policy easing as it assesses the likely turbulent political and economic landscape ahead.

As expected, the Federal Open Market Committee (FOMC) left its borrowing rate unchanged in a range between 4.25% and 4.50%.

The decision followed three consecutive cuts since 2024 and marked the first Federal Reserve meeting since frequent Fed critic Donald Trump assumed the presidency last week. He almost immediately expressed his intention for the central bank to cut rates.

The post-meeting statement scattered a few clues about the reasoning behind the decision to hold rates steady. It offered a more optimistic view on the U.S. labour market while losing a key and telling reference from the December 2024 statement that inflation ‘has made progress toward’ the Fed’s 2% inflation goal.

Statement

Text appearing for the first time in the new statement is in red and underlined. Black text appears in both statements.

Text appearing for the first time in the new statement is in red and underlined. Black text appears in both statements.

The decision comes against a volatile political backdrop.

In just over a week, Trump has disrupted Washington’s policy and norms by signing hundreds of orders aimed at implementing an aggressive agenda.

The U.S. president has endorsed tariffs instruments of economic and foreign policy, authorised a wave of deportations for those crossing the border illegally, and a series of deregulatory initiatives.

Trump spoke of his confidence that he will bring down inflation and said he would ‘demand’ that interest rate be lowered ‘immediately.’

Although the president lacks authority over Fed beyond nominating board members, Trump’s statement indicated a potentially contentious relationship with policymakers, similar to his first term.

Inflation has moved down sharply from the 40-year peak it hit in mid-2022, but the Fed’s 2% goal has remained elusive.

In fact, the central bank’s preferred pricing gauge showed headline inflation ticked higher to 2.4% in November, the highest since July, while the core measure excluding food and energy held at 2.8%.

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Recent surprise rise in UK borrowing – deals yet another disappointment for the chancellor

UK borrowing

The latest UK borrowing figures, reveal a significant increase in public sector net borrowing. In December 2024, the UK government borrowed £17.8 billion, which is the highest figure for the month for four years.

This amount was reportedly £10.1 billion higher than the same month last year and exceeded the £14.1 billion forecast by most economists.

The reported rise in borrowing was driven by several factors, including increased spending on public services, benefits, debt interest, and capital transfers. The interest payable on central government debt alone was £8.3 billion, nearly £4 billion higher than the previous year.

Additionally, a reduction in National Insurance contributions following rate cuts earlier in 2024 partially offset the increase in tax receipts.

Chancellor Rachel Reeves faces a challenging fiscal environment, with borrowing costs rising due to lower economic growth, higher public sector wages, and increased benefits payments. The unexpected jump in December 2024’s borrowing highlights the difficulties in balancing the budget and maintaining economic stability. The Chancellor’s budget was one of growth, but employer NI hikes have unravelled her ‘growth’ plan.

Despite the rise in borrowing, government bond prices remained relatively stable, suggesting that traders were not overly concerned by the surge. However, the overall fiscal position remains precarious, with public sector net debt estimated at 97.2% of GDP, the highest level since the early 1960s.

The government has pledged to take a hard line on unnecessary spending and to ensure that every penny of taxpayer money is spent productively.

As the fiscal year progresses, the Chancellor will need to navigate these financial challenges carefully to maintain economic stability and growth.

However, it is anticipated next month, following the January tax income boost, figures will appear favourable for the government, albeit temporarily.

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S&P 500 at new high!

Stocks up

On 23rd January 2025, the S&P 500 reached a new all-time high, closing at 6,118.71

This milestone was driven by a combination of strong fourth-quarter earnings results and a significant announcement from President Trump regarding a $500 billion investment in AI infrastructure.

The investment, led by OpenAI, SoftBank Group Corp., and Oracle Corporation, aims to develop data centres and create over 100,000 jobs, further fueling investor optimism.

Additionally, solid earnings reports from major corporations like Netflix and Capital One Financial Corporation contributed to the positive market sentiment.

The S&P 500’s new high reflects the broader market’s confidence in the economic outlook and the potential for continued growth in the technology sector.

But be careful. Despite ‘pundits’ suggesting the S&P 500 could hit 6,600 or higher this tear – we are now in pricey territory and a pullback is likely due soon.

S&P 500 one-year chart

S&P 500 one-year chart

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Japan increases interest rate chasing down rising inflation

Bank of Japan

The Bank of Japan recently raised its interest rate by 25 basis points to 0.5%, marking the highest level since 2008

This decision was influenced by sustained inflation and rising wages, signalling a cycle in the economy.

The move was expected by many economists and resulted in the Japanese yen strengthening against the dollar.

The Bank of Japan has indicated that more interest rate hikes may be on the horizon.

One year Nikkei chart

One year Nikkei chart
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S&P 500 touches new record high!

Stocks rose on Wednesday 22nd January 2024 with the S&P 500 reaching a new all-time high, as technology shares including Nvidia and Oracle surged on optimism surrounding artificial intelligence and President Donald Trump’s new term in office.

The S&P 500 advanced after hitting an intraday record of 6,100.81, exceeding the last milestone touched in December 2024 before pulling back. The index closed at 6,086.37, slightly below its all-time closing high.

S&P 500 one-month chart as of Wednesday 22nd January 2024

S&P 500 one-month chart as of Wednesday 22nd January 2024

The S&P’s move to an all-time high comes as investors witnessed a December 2024 pullback. Despite the index ending last year with a 23% gain, the S&P 500 shed 2.5% in December 2024, as traders fretted that the Federal Reserve wouldn’t be able to cut rates as much as anticipated.

That lacklustre performance bled into the first few trading sessions of 2025, but some data indicating modest easing on the inflation front and good earnings results have helped the market recover.

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UK FTSE 100 back in favour as it breaks new highs!

FTSE 100

The FTSE 100, the UK’s premier stock market index, has recently reached unprecedented new highs, marking a significant milestone in the UK financial world.

On 20th January 2025, the FTSE 100 closed at a record high of 8,548, surpassing the 8,500 barrier for the first time.

This achievement is a testament to the resilience and strength of the UK’s largest companies, even amid global economic uncertainties.

Several factors have contributed to this remarkable performance. Firstly, the anticipation of potential interest rate cuts by the Bank of England has fueled investor optimism. Lower interest rates typically reduce borrowing costs for companies, encouraging investment and expansion, which in turn boosts stock prices.

Additionally, the recent rise in oil prices has significantly benefited major oil companies like BP and Shell, which are key components of the FTSE 100.

FTSE 100 reaching new highs – one month chart as of 22nd January 2025 (08:21)

The banking sector has also played a crucial role in driving the index higher. With full-year earnings reports expected soon strong performance from banks could further propel the FTSE 100.

Furthermore, the index’s composition, which includes a substantial number of companies with global operations, has allowed it to benefit from the weaker pound. A weaker pound makes UK exports more competitive and increases the value of overseas earnings when converted back to sterling.

Market analysts are now speculating whether the FTSE 100 could reach the 9,000 mark in the coming months. While this would represent a significant rise from current levels, it is not entirely out of reach given the current momentum and favorable economic conditions.

However, some caution that the index’s rapid ascent may be followed by periods of volatility, especially as global economic conditions evolve.

In conclusion, the FTSE 100’s recent surge to new highs is a reflection of the robust performance of its constituent companies and the broader economic environment.

As investors continue to navigate the complexities of the global market, the FTSE 100 remains a key barometer of the health and vitality of the UK economy.

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China’s fourth-quarter GDP grows at 5.4%

China GDP

China’s economy expanded by 5.4% in the fourth quarter, surpassing market expectations, as a series of stimulus measures propelled the economy to meet Beijing’s growth target

This final-quarter surge helped elevate China’s full-year GDP growth to 5.0% in 2024, with the official target of around 5%.

In December 2024, retail sales increased by 3.7% from the previous year, exceeding forecasts of around 3.5%. Industrial output reportedly grew by 6.2% compared to previous year, surpassing expectations of 5.4%.

Contrast these figures to the UK’s quite pathetic 0.1% growth recently announced.

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UK eeks out tepid 0.1% growth

UK growth

The UK economy grew for the first time in three months – but only just.

The tiny growth was driven in part by an increase in trade for pubs, restaurants, and the construction industry.

Official figures showed an expansion of 0.1% after the economy contracted in each of the two months.

The return to growth will be a welcome sign for the government after recent turbulence in financial markets sent borrowing costs to their highest level in several years and caused the value of the pound to fall.

However, the figure was lower than economists had expected, with declines in manufacturing and business rentals and leasing.

Chancellor Rachel Reeves reiterated her pledge to go ‘further and faster’ to improve economic growth in order to boost living standards, declaring it was the ” number one priority” for the government.

‘That means generating investment, driving reform, and a relentless commitment to rooting out waste in public spending,’ she reportedly said. She also repeated her accusation of blame at the Tories for the low growth. The chancellor surely cannot expect to continue escaping accountability with the blame game tactic for much longer.

However, with tax rises set to come into effect in April 2025, businesses have repeatedly warned that the extra costs faced through in National Insurance, as well as the minimum wage, could impact the economy to grow, with employers expecting to have less cash to give pay rises and create new jobs.

In the three months to November, the economy is estimated to have shown no growth, as calculated by the Office for National Statistics (ONS).

UK November 2024 0.1% growth

UK November 2024 0.1% growth

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U.S. core inflation rate slows to 3.2% in December 2024 – less than expected and sets off market feeding frenzy

Inflation

The U.S. Consumer Price Index rose by a seasonally adjusted 0.4% for the month, resulting in a 12-month inflation rate of 2.9%. This figure was consistent with forecasts.

Core CPI annual rate was 3.2%, down from the month before and slightly better than the 3.3% outlook.

Stock markets surged following the release as Treasury yields fell.

U.S. consumer price index

Year-on-year percent change – Jan. 2021 to Dec. 2024

U.S. core inflation (CPI) Year-on-year percent change  Jan. 2021–Dec. 2024
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Latest U.S. producer price index inflation rose 0.2% – in line with expectations

Inflation

The latest U.S. producer price index (PPI) data indicates that wholesale inflation increased by 0.2% in December 2024, primarily driven by higher energy costs

This rise was slightly less than the 0.4% gain witnessed in November 2024. Compared to a year earlier, producer prices were up by 3.3%.

The rise in energy prices, particularly a 9.7% increase in gasoline prices, was a significant factor in the overall increase. Food prices, on the other hand, reportedly fell by 0.1% in December 2024. Excluding food and energy, core wholesale inflation was unchanged from November 2024 but up 3.5% from a year-on-year.

The PPI report is closely watched because it can offer an early look at where consumer inflation might be headed. Some components of the PPI, such as healthcare and financial services, flow into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index

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Has ‘Rachel from accounts’ messed up the UK economy?

UK budget

The pound has continued to fall after UK government borrowing costs rose and concerns grew about public finances

Sterling dropped as UK 10-year borrowing costs surged to their highest level since the 2008 financial crisis when bank borrowing virtually ground to a halt.

Economists have warned the rising costs could lead to further tax rises or cuts to spending plans as the government tries to meet its self-imposed borrowing target.

The UK government creates its own financial crisis as it messes up its ‘go for growth’ policy

The UK economy is currently grappling with a series of financial challenges that have led to a significant fall in the value of the pound, soaring treasury yields, and high borrowing costs.

These developments have been largely influenced by the recent budget announced by Chancellor Rachel Reeves, which has sparked concerns among investors and economists alike.

Downward trajectory

The pound has been on a downward trajectory, recently hitting its lowest level since November 2023. Traders are betting on further declines, with some predicting the pound could fall as low as $1.12

This decline is partly due to the rising cost of government borrowing, which has surged to levels not seen since the 2008 financial crisis. The yield on 10-year gilts has climbed to 4.8%, while the yield on 30-year gilts has reached 5.34%, the highest in 27 years.

Recent UK budget

The recent budget has played a crucial role in these developments. Announced in October 2024, the budget included significant tax hikes and increased spending, leading to a substantial rise in government borrowing.

The budget deficit is expected to reach 4.5% of GDP this fiscal year, pushing the overall government debt close to 100% of GDP. This increase in borrowing has led to a higher supply of government debt, which in turn has driven down the price of bonds and pushed up yields.

Higher yields

Higher yields mean that the government has to pay more to borrow money, which has significant implications for its fiscal policy. The rising cost of servicing government debt could force the government to either raise taxes further or cut spending to meet its fiscal rules.

This situation is reminiscent of the market turmoil following Liz Truss’s mini budget in 2022, which also led to a sharp rise in borrowing costs and a fall in the value of the pound.

The impact of these developments extends beyond the government. Higher borrowing costs are likely to affect households and businesses as well.

Economic growth at risk

Mortgage rates, which are influenced by government bond yields, are expected to remain high, putting additional pressure on homeowners. Businesses, on the other hand, may face higher costs of borrowing, which could lead to reduced investment and slower economic growth.

The UK is facing a challenging economic environment characterized by a falling pound, high treasury yields, and rising borrowing costs.

The recent budget has exacerbated these issues, leading to increased government borrowing and higher debt levels. As the government navigates these challenges, it will need to carefully balance its fiscal policies to avoid further economic instability and ensure sustainable growth and not more ‘unfunded’ debt.

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Euro zone inflation rose to 2.4% in December 2024 – as expected

Inflation

The annual inflation rate in euro zone increased for the consecutive month reaching 2.4% in December 2024, according to the statistics released on Tuesday 7th January 2024 by Eurostat

The reading, according to economists’ forecasts, indicated an increase from a revised 2.2% figure in November 2024. Core inflation remained steady at 2.7% for the fourth consecutive month, meeting economists’ expectations, while services inflation edged up to 4% from 3.9%.

Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September 2024, as the effect from lower energy prices fade.

The European Central Bank will monitor the full extent of increases in the reading, as well as persistence in services and core inflation. Markets currently anticipate that the ECB will reduce rates from 3% to 2% through several cuts this year.

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UK economy had zero growth between July and September 2024 – bad to worse

UK economic data

Revised official figures indicate that the UK economy was weaker than initially estimated between July and September 2024. The economy experienced zero growth in these three months, down from an earlier estimate of 0.1%.

UK Chancellor, Rachel Reeves reportedly stated that the challenge to fix the economy “after 15 years of neglect is huge,” and October’s Budget would “deliver sustainable long-term growth, putting more money in people’s pockets.”

However, one of the UK’s leading business groups, the CBI, said its latest company survey suggested “the economy is headed for the worst of all worlds.”

The downward revisions will be a setback for Labour, which has prioritised boosting economic growth. It has promised to deliver the highest sustained economic growth in the G7 group of wealthy nations.

Separate figures released last week showed that inflation, the rate at which prices increase over time, is rising again at its fastest pace since March 2024. But it is close to the Bank of England target of 2%

The Bank of England voted to hold interest rates at the last meeting, stating that it believed the UK economy had performed worse than expected, with no growth between October and December 2024.

Businesses have warned that measures announced in October’s Budget, including a rise in employer national insurance and a higher minimum wage, could force them to raise prices and reduce the number new jobs.

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U.S. inflation reading of 2.4% for November 2024 is better than expected

Inflation PCE

The PCE price index, the Fed’s preferred inflation gauge, showed an increase of just 0.1% from October and a 2.4% annual rate – which was below expectations.

Excluding food and energy, core PCE also increased 0.1% monthly and was 2.8% higher from a year ago, with both readings being 0.1% off the forecast.

The personal consumption expenditures price index (PCE) – the Fed’s preferred inflation gauge, showed an increase of just 0.1% from October 2024.

The reading indicated a 2.4% inflation rate on an annual basis, still ahead of the Fed’s 2% goal, but lower than the 2.5% consensus estimate.

The markets cheered the inflation report and recovered loses after yesterdays (19th December 2024) FOMC meeting where the Fed announced it may only reduce interest rates on two more occasions in 2025 – even after a 0.25% rate reduction.

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Fed cuts interest rate by 0.25% – indicates fewer cuts in 2025

U.S. interest rate

The Federal Open Market Committee (FOMC) cut its borrowing rate to a range of 4.25% – 4.50%, mirroring its December 2022 level.

The Fed indicated that it probably would only lower twice more in 2025, according to the closely watched ‘dot plot’ matrix of individual members’ future rate expectations

While the decision itself was closely watched, the primary concern centered on what they would communicate regarding its future direction, considering inflation remains above and economic growth is relatively – conditions that do not typically align with easing.

The Fed said that it would probably only lower the interest rate twice in 2025. The markets reacted with a sharp pullback with the Dow hitting a 10-day losing streak – last seen in 1974.

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Dow down again – falling for 10th consecutive day

Dow down

The Dow Industrial Average dropped 1,123 points to 42,326.87, marking its 10th consecutive day of decline and the longest since 1974.

The Dow is lining up for potentially its worst weekly performance since March 2023.

The S&P 500 fell 2.95% to 5,872.16, while the Nasdaq Composite decreased 3.56% 19,392.69 as losses in the tech-heavy index accelerated at the end of the session.

Both the 30-stock Dow and the S&P 500 recorded their largest one-day loss since August 2024.

The Dow and most other indices reacted badly to the Feds interest prediction for 2025 – suggesting ‘maybe’ only two more rates cuts to come.

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)
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UK inflation rate rises to 2.6% to hit highest level since March 2024

The UK inflation rate has gone up for the second month in a row, rising at the fastest pace since March 2024. The UK inflation rate rose to 2.6% in the year to November 2024, according to official figures.

However, the rise was predicted by economists and was apparently within the range of the expected increase anticipated.

Fuel and clothing were significant contributors to the increase. Additionally, rising ticket prices for concerts and theatrical performances played a role according to data from the Office for National Statistics (ONS).

The Bank of England raises interest rates to maintain inflation at its target of %. The next rate decision is on Thursday 19th December 2024 and economists anticipate that rates will remain at 4.75%.

Prices for food and non-alcoholic drinks, alcohol and tobacco, and footwear all rose at a faster pace last month.

A wider measure of inflation showed housing and household services costs, including rent, rose by 3.5%.

UK inflation 2016 – 2024

UK inflation 2016 – 2024
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UK economy shrinks unexpectedly for second month in a row contracting 0.1% in October 2024

The U.K. economy contracted unexpectedly in October 2024, according to data from the Office for National Statistics (ONS).

Gross Domestic Product (GDP) fell by an estimated 0.1% on a monthly basis, the ONS said Friday 13th December 2024, attributing the downturn to a decline in production output. 

It marked the second consecutive economic downturn, following a 0.1% GDP decline in September 2024. Sterling declined on the back of these disappointing figures, trading 0.3% lower against the U.S. dollar in early trade.

However, ‘real’ GDP is estimated to have grown 0.1% in the three months to October 2024, the ONS said, compared to the previous three months ending in July 2024.

In a statement on Friday 13th December 2024, U.K. Finance Minister Rachel Reeves reportedly conceded that the October figures were ‘disappointing,’ but defended the government’s economic strategies. I expect the chancellor would have been quick to own the success had the GDP improved – especially after the ‘for growth’ budget.

The economy has grown just once over the past five months and is 0.1% lower than before Labour won the election. That may suggest it’s not just the Budget that is holding the economy back. Instead, the drag from higher interest rates may be lasting longer than was calculated.

Either way, be it budget or inflation pressure – the UK economy isn’t growing.

UK GDP January 2022 – October 2024

Note: preliminary ONS figures may be revised in future assessments

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U.S. annual inflation rate increases to 2.7% in November 2024 – as expected

Inflation U.S.

U.S. consumer prices rose at a faster annual pace in November 2024, a reminder that inflation remains an issue both for households and policymakers.

The consumer price index (CPI) showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday 11th November 2024. The annual rate was 0.1 percentage point higher than October 2024.

Excluding food and energy costs, the core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core number was unchanged from a month ago.

All of the numbers were in line with consensus estimates.

The data comes with Federal Reserve deciding over what to do at their policy meeting next week. Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by 0.25% at the meeting on 18th December 2024.

It is unlikely now that a January rate cut will happen as the FOMC measures the impact recent cuts have had on the economy.

Odds are of a 99% certainty of a cut in December 2024.

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Tesla shares climb to record high – boosted by Trump election victory

Tesla EV

Tesla shares soared to an all-time high on Wednesday exceeding their previous record set in 2021, driven by a post-election rally and heightened enthusiasm Wall Street for Elon Musk’s electric vehicle company.

The stock increased to an intraday high of $415, exceeding its previous peak by 50 cents and closed above its highest finish of $409.97 recorded on 4th November 2021.

Tesla’s market has increased reportedly increased by around 69% this year, with nearly all of those gains occurring after Trump’s election victory early last month. The stock’s 38% rally in represented its monthly performance since January 2023 and ranks as the 10th best on record.

Reportedly according to Federal Election Commission filings, Musk invested $277 million into a pro-Trump campaign effort and transformed his support for the Republican nominee into a full-time job in the lead-up to the election. He financed an operation in swing states to register voters and utilised his social media platform, to promote his chosen candidate, often disseminating misinformation.

The world’s wealthiest individual, whose net worth has increased to over $360 billion, is poised to head the Trump administration’s ‘Department of Government Efficiency,’ DOGE – together with former Republican presidential candidate Vivek Ramaswamy.

The newly formed DOGE will be tasked with culling government bureaucracy by streamlining and junking departments.

Musk’s role may grant him authority over the budgets and staffing of federal agencies, well as the capability to advocate for the removal of inconvenient regulations. During a Tesla earnings call in October, Musk reportedly stated intention to leverage his influence with Trump to create ‘Federal approval for autonomous vehicles.’ At present, approvals are at the state level.

Is business now openly running he U.S. government?

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UK business confidence falls to lowest level in almost two years after Labour budget

In November 2024, business confidence in the U.K. dropped to its lowest point since January 2023, as reported by BDO, a business advisory and accountancy firm.

Concurrently, KPMG noted that UK job vacancies decreased at the quickest pace since the pandemic began. This downturn coincides with warnings from businesses that the Labour Party’s ‘pro-growth’ budget could exacerbate inflation and decelerate hiring.

Tax increases do not fit well with a ‘pro-growth’ agenda. Also, GDP predictions made by the UK chancellor for 2025 through 2027 are lame.

The Labour budget has notably affected U.K. business confidence for a variety of critical reasons:

  • Tax Increases: The budget introduced a substantial hike in National Insurance contributions for employers, raising the rate to 15% on salaries above £5,000. This increase has led to concerns about higher operational costs, which many businesses fear will result in job cuts and reduced investment.
  • Minimum Wage Hike: The budget also included an inflation-busting increase in the minimum wage. While this aims to improve living standards, it has added financial pressure on businesses, particularly those in sectors with tight margins like retail and hospitality.
  • Economic Uncertainty: The combination of these measures has created a sense of economic uncertainty. Businesses are worried about their ability to absorb these additional costs, leading to a decline in overall optimism.
  • Investment Concerns: The increased costs have forced many businesses to reconsider their investment plans. Some have already announced cuts to expansion projects and other growth initiatives.
  • Next Increase: in public workers pay looms nigh.

These factors have collectively contributed to a significant drop in business confidence, with many firms bracing for a challenging economic environment ahead

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U.S. Fed’s preferred inflation measure rises to 2.3% 

U.S. inflation

The Personal Consumption Expenditures (PCE) price index announced 27th November 2025, rose by 0.2% monthly, matching a 12-month inflation rate of 2.3%, aligning with expectations.

Core U.S. inflation recorded more robust figures, climbing 0.3% monthly and reaching an annual rate of 2.8%, but also in accordance with forecasts.

Consumer spending increased by 0.4% monthly, as expected, while personal income surged by 0.6%, exceeding the estimated 0.3%.

The Federal Reserve is now likely searching for economic clues on how to proceed at its next interest rate meeting.

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Deflation worries linger as China’s industrial profits reportedly fall by 10% in October 2024

China economy

In October 2024, China’s industrial profits fell by 10% compared to the previous year, indicating that the stimulus measures have not yet countered the downturn in corporate earnings.

This decline represents the third consecutive month of falling profits, succeeding a 27% year-on-year drop in September 2024, which was the most significant decrease since March 2020.

Industrial profits serve as an important indicator of the financial health of China’s factories, mines, and utilities.

For the first ten months, profits at China’s industrial companies saw a 4.3% reduction from the previous year, as reported by the National Bureau of Statistics of China on Wednesday 27th November 2024. This is in contrast to a 3.5% decrease reported up to September 2024.

The statistics bureau reportedly noted that the less severe decline in October 2024 was due to the application of Beijing’s stimulus measures.

The second-largest economy in the world expanded at its most modest rate in the third quarter since early 2023, struggling with subdued domestic consumption and an extended slump in the housing market.

However, retail sales in October 2024 exceeded forecasts with a 4.8% increase compared to the same period last year, and there was an improvement in the unemployment rate.