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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
The Bank of England has increased its key interest rate for a second consecutive month, in a bid to ease the burden of the sharp rise in inflation.
To help stem the rising levels of inflation, which the Bank predicts could peak at 7.25% by April, it has increased the rate by a quarter point from 0.25% to 0.5%. It is the first time the Bank has hiked rates in two successive meetings since 2004.
The Bank’s Monetary Policy Unit was split 5-4 on the size of the increase of the rate, with four pushing for a bigger, 0.5% rise instead.
In a stark warning, the Bank has also slashed its growth forecast and predicted that families are set to suffer the biggest fall in living standards since comparable records began three decades ago.
In the United States, confusion has arisen over the most recent jobs data. Last Wednesday’s report by private payroll firm ADP suggested that its tally of private sector employment fell by 301,000 in January - in what would be the steepest decline since the start of the pandemic. However, data from the Labor Department on Friday reported a surprising increase of 467,000 jobs, roughly three times initial expectations.
The Caixin/Markit Manufacturing PMI fell to 49.1 in January - its lowest level since February 2020 - from 50.9 in December, suggesting that smaller, private firms in China struggled last month. China’s official manufacturing PMI surveys mostly big and state-owned firms, while the private Caixin survey focuses on smaller, export-focused companies.
More evidence of falling sales reflected continued pressure on China’s cash-strapped property sector, which has been suffering a liquidity crisis since last year. Sales for the 100 biggest companies in the property industry slumped 39.6% in January from a year ago compared with December’s 35.2% decrease, according to preliminary data by China Real Estate Information Corp.
