Market Musings 011022: Time for a UK countertrend rally

Market Musings 011022:Time for a UK countertrend rally

We enter October with conditions ripe for at least a decent stock market rallyThis week’s podcast:

We answer your questions

This report aims to answer our clients’ most frequently asked questions of the momentSummary:

UK chaos leads to investing opportunities in bonds, stocksBank of England expected by interest rate markets to continue raising the base rate to 5.6% by March 2023Expect pain in the UK residential housing market as mortgage rates soarInvestment opportunities in US-dollar earners, dividend-payers in the FTSEUK chaos creates an opportunity

As if the ongoing bear market in financial markets wasn’t already generating enough volatility, the UK Conservative government had to add more excitement of their own from a remarkably eventful tax-cutting mini-budget.

I am not going to discuss the ins and outs of these tax-cutting measures, save to say that I personally found some of the tax cuts unveiled.an inefficient way to potentially boost the economy.

What is more interesting to me is the reaction of financial markets, which was initially very negative - reflected in the plunge in the value of sterling against the US dollar, and in the sharp spike in the long-term UK gilt (government bond) yield.

Mini-budget...