Bi-Weekly Market Update

Wednesday, 19 February 2025

How is it February half term already?

The start of 2025 seems to be flying past us with an absolute flurry of activity and an awful lot of political noise! The start of the year has been quite the whirlwind with the Trump administration settling back into the Whitehouse, we have seen a lot of noise around his trade policies which have been heightening market uncertainty around the world. Just this week he announced his intentions to increase duties on steel and aluminum.

Yet, despite the caution from investors as to the impacts of the trade policies, the S&P 500 had its best week since late January. With investors shifting focus from inflation worries to growth prospects, with analysts predicting improved earnings in the tech and energy sectors 2025 still continues to have a relatively positive outlook for US equities.  Other areas of the market that have seen surging prices is the gold market, as investors look to this asset class deemed to be a ‘safe haven’ to provide protection during these ever changing and volatile times

Which really sets the scene for this week’s update. Noise.

The economic and political landscape is always changing, this is something we are learning first hand as new governments throughout the world settle into their premierships. By no means are we facing an easy path, in the UK we saw inflation rates creeping up for Jan 2025 to 3%, (not expected following the recent budget) but still a signal that the increased taxes and general living costs are creating inflationary pressure. The Bank of England are predicting that inflation could continue to rise as much as up to 3.7% before tailing off, when looking at forthcoming energy price rises that are anticipated from April 2025. The consequence of this will likely be a more cautionary approach from the Bank of England as to when they look to cut interest rates, albeit I still am anticipating around two rate cuts in 2025.

I always laugh to myself that within minutes of the Bank of England announcing any form of interest rate cut, it is like every email marketing department of every bank is ready with their finger on the button to announce a savings interest rate cut. Some 180 of our mainstream banks, HSBC, Natwest, NS&I have all announced their intentions to cut rates in March and/or April.  These changes are important to take note of it is easy to become complacent in thinking that the rising interest rates have got your cash working for you, in a way that it hasn’t for many years. But make sure you are looking at the rates and that your cash continues to work for you. You might want to consider fixed rate deposits to optimise your interest earnings; but more broadly now presents a great time to start considering your medium to longer term plan.

In other market news, I spoke last time about the importance of diversification and the toppy valuations that we are seeing coming from the US currently, not that is stopping the ever-rising prices! Other areas of the market remain interesting such as Japan and the UK which continue to be undervalued in my opinion. We have also seen over recent weeks increased flows into Europe as investors look to de-risk their exposure to the US amidst Trump’s trade tariffs and high valuations. This coupled with the prospect (although very early days) of a peace deal in Ukraine, is strengthening Europe’s economic prospects.

And that’s just the half of it when it comes to updates, but enough for this bi-weekly update. As I said earlier there is a lot of noise, sometimes noise that is very hard to switch ourselves off to. It leads us to start second guessing our options and distracting us from our goals and objectives. But we really must focus on not allowing it to. We are on our own journeys, with different aspirations and objectives amongst us, with one key similarity we all want our money to work effectively and efficiently for us. So, stay on your path, focus on what matters to you and keep chipping away at your own personal goals and objectives, remember this is a marathon not a sprint!

As I said last week, I would like to add another feature to these updates and ask you all what would like to see us focusing upon? As you know I am passionate about opening the conversation around money so please do send in any questions or topics that you want to be covered, and I will be sure to start building these into our features!