“January was filled with optimism that Omicron would lack the punch of Delta and that the recovery would bring revitalization to global economies. Many investors will prefer an overhaul, but the markets can be unforgiving. Action today was fairly subdued but overall positive, but while the Dow managed to find some forward momentum, London’s FTSE ended the day in reverse. But looking at today’s economic data, it’s hard to tell if the end of the month leaves the glass half full or half empty.
“On the one hand, Germany’s inflation figures have fallen, on the other hand, Chinese manufacturing output fell to its lowest rate in two years in January, suggesting that there is more choppy water ahead. But then if you look at the Baltic Dry Index it suggests shipping costs are finally coming down but according to JLR’s latest rather disappointing update there is still no end to the global shortage of fleas. In a nutshell, the world is in the midst of post-covid change and it also faces a hint of nervousness as to how the situation in Ukraine will ultimately unfold.
“As Goldman Sachs cut its US growth forecast, growth stocks looked very much in fashion today with Scottish Mortgage Investment Trust topping London’s blue chip index and US Growth Trust of Baillie Gifford making decent gains on the FTSE 250 and Tesla and Netflix joining e-commerce Pinduoduo to help lift the Nasdaq But while the day was full of tech joy, it was a tough month for the tech index heavy and it is still down more than 10% since the start of the month, while the FTSE 100 has managed to emerge slightly higher where the year started.
“February will undoubtedly bring its own tribulations starting with the Bank of England’s latest rate hike decision. Investors are confident that another hike is on the cards, but there is also that little seed of doubt. until the decision drops. Certainly the pressure to do something to help cash-strapped consumers will weigh heavily, but there is a time lag and the relief will not be instantaneous.”