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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.
New data has revealed that the UK economy unexpectedly shrunk by 0.1% in March as households and consumers continue to cut back in the face of the cost of living crisis.
Gross domestic product fell 0.1% from February, when growth was flat, the Office for National Statistics said Thursday. It meant the economy expanded just 0.8% in the first quarter, less than the 1% forecast by economists.
While the quarterly growth takes output back above its pre-pandemic level for the first time, it’s almost certain to mark the high point of the year with the worst bout of inflation since the 1980s expected to see the economy rapidly lose momentum and possibly slide into a recession.
Elsewhere in Europe, both Finland & Sweden have formally announced their decision to join NATO. The Russia foreign ministry threatened unspecified “military-technical” retaliation. Previously, Russian officials have warned that they might place nuclear weapons in the Kaliningrad enclave on the Baltic coast.
In the United States, stocks recorded another week of losses as investors appeared to grow increasingly sceptical that the Federal Reserve will be able to achieve a “soft landing” for the economy - by raising rates enough to tame inflation without causing a recession. The Cboe Volatility Index (VIX) remained elevated but slightly below its recent high. Many cryptocurrencies plunged in value, further suggesting a strong risk-off environment.
Finally, against the backdrop of the war between Russia and Ukraine, Japan’s government agreed in principle on a ban of Russian oil imports with other G7 nations. Prime Minister Fumio Kishida stressed the importance of G7 coordination. However, he emphasised that it had been a difficult decision given the resource-poor country’s dependence on Russian fuel and that Japan will take its time to reduce or suspend imports as part of a phased approach to minimise the negative impact on people’s lives and business activities.
