One of my earliest recollections is of waving a flag at the time of the coronation of Queen Elizabeth II. I would have been at primary school at the time, wearing short trousers and probably not too aware of what was going on. A decade later I started my first job in the City of London. This Platinum Jubilee has given me much to reflect on as my long career in the investment industry approaches its end, not that I’m planning to mothball my work computer just yet.
Despite the indifferent weather that has ushered in this week of celebration and continuing concern over the rising cost of living, the mood in the market has felt remarkably upbeat. The oil price received a boost as traders try to position themselves against wider demand from the European Union as they endeavour to replace Russian supplies. This, of course, is hardly good news for inflation.
The long Jubilee weekend has meant a somewhat condensed week, so far as market news is concerned, and many will be taking holidays to benefit from both half term and the two Bank Holidays. That said, news from around the world will continue to percolate through, so we may have some catching up to do next week. With little expected on the corporate front, it will be big picture news that is likely to make the running.
Aside from the continuing conflict in Ukraine and inflation, it is the extent of the slowdown in the global economy that will be the true focus of attention. The signs are mixed. Data coming out from the United States suggests that the American economy is holding up better than feared. The second largest world economy, China, has its own set of problems, following the resurgence of Covid cases, but even here there are encouraging signs, with lockdown now lifted in Shanghai.
So, perhaps it is how Europe and ourselves cope with current pressures that will be most crucial. The recent weakness of the pound indicates that investors consider we are at greater risk of continuing inflation and slower economic growth than our peers. And continuing doubts over the future of the Prime Minister hardly helps. But this is a week for celebrating our heritage, so I prefer to trust our stock market, which is telling us we will get through this crisis relatively unscathed.
