St. James's Place News
IMF urges further growth stimulus
Global markets got off to a good start last week as investors gave a sigh of relief that corporate earnings in the US and Europe were not as bad as many had feared. Sentiment was also boosted by hopes that the US Federal Reserve will ease monetary policy via a further dose of QE in coming months. Falling US retail sales and weak job growth in recent weeks has increased speculation that Fed Chairman, Ben Bernanke will once again inject further cheap money into the economy in the hope of stimulating growth.
Closer to home, the IMF has cut its growth forecast for the UK to just 0.2% against the 0.8% predicted back in the Spring, believing Britain’s prospects to be far bleaker than it thought previously. This is despite the likely boost to the economy from the forthcoming Olympics – data last week showed that fewer people were unemployed, thanks in part to job creation in London as a direct result of the Games.
Also in this week's bulletin...
- Once again worries resurfaced over eurozone debt problems. Despite the approval of a €100 billion rescue package for Spain’s banking sector, a poorly received auction of Spanish government bonds pushed ten-year yields above the pivotal 7% level.
- The ‘fiscal cliff’ in the US is another factor weighing on the minds of investors currently. The combination of mandatory budget cuts due at the end of the year, coinciding with the expiration of Bush-era tax cuts could potentially send the US back into recession unless policymakers agree new legislation.
- Despite eurozone woes and the UK being in recession, shareholders are enjoying record-breaking dividends as profits at Britain’s largest companies shrug off a struggling economy. According to data from Capita Registrars, second-quarter payouts to shareholders surged by 18% to £22.6 billion.
View this week's Market Bulletin (PDF), which contains thoughts and opinions of St. James’s Place and our range of investment managers on the key issues affecting investors.
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