The latest from London: Strong start for UK markets, trailing Wall Street

The FTSE 100 is u to a good start after Wall Street’s strong session yesterday, as investors bought the dip. While the Nasdaq and S&P 500 recorded their biggest monthly losses since March 2020, January was the second consecutive month of growth for the FTSE 100.

New data from Nationwide shows that House prices have continued to grow in January, with a stronger-than-expected monthly jump of 0.8%.

Among stocks, retailer Joules has warned that profits are below expectations due to lower footfall in January as Omicron spread across the UK.

All eyes are on the Bank of England, which is due to unveil its monetary policy decision on Thursday. In December, it already raised its main interest rate to 0.25% from its historic low of 0.1%. However, it is expected to go further this week, as U.K. inflation jumped to a 30-year high in December, with most economists expecting another 25 basis point hike on Thursday.

Regarding quantitative easing, Berenberg believes that “if economic and financial conditions justify QT, there is no need to panic. As long as markets can absorb the gilts the BoE may supply once it undertakes active sales, benchmark rates need not rise much faster or to a higher level than would otherwise be justified by economic fundamentals.”

 

Things to read today:

World’s largest wealth fund warns ‘permanent’ inflation will hit returns (Financial Times)

Bank of England predicted to raise rates for second time in quick succession (Financial Times)

Spotify’s Fate Is in the Stars (WSJ)