St. James’s Place WeekWatch 18th November 2024

22 Nov

Written By David Gardner

Thank you, SJP Asia and Middle East, for sharing your market insights in the latest edition of WeekWatch with our community. We’ve taken the time to identify some key points for consideration below. If you’d like to read the full update, click on the button below.

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Stock Take

Wall Street extended its post-election rally and set new highs at the beginning of the week.
On Wednesday, the US Labor Department reported that consumer price inflation rose to an annual rate of 2.6%. Higher service costs also increased US producer inflation in October, leading to speculation that the Federal Reserve may not lower interest rates as expected.
Wall Street rose as inflation data suggested the Fed may cut rates in December. However, global stocks fell as investors favoured assets benefiting from the president-elect's policies, also known as the “Trump Trade.”
Republicans winning Congress boost plans for aggressive tax cuts for workers, businesses, and retirees. Forecasts suggest Trump's tax and spending policies may add $7.5 trillion to the current $35 trillion government debt. A Reuters poll shows that 62% of Americans expect increased national debt due to Trump's policies.
A drop in weekly jobless claims indicated the US labour market remains stable, suggesting October's job growth decline was an anomaly.
Fed chair Jerome Powell stated there’s no hurry to lower interest rates due to the economy's strength, but he refrained from commenting on how Trump’s tariff and tax plans might influence future decisions.
US retail sales rose 0.4% last month, exceeding expectations, as households spent on vehicles and electronics. Traders adjusted forecasts for the Fed's third rate cut in December.
Wall Street reversed some recent gains as investors took profits post-election. Vaccine manufacturers struggled after Donald Trump suggested Robert F. Kennedy, an anti-vaccine activist, for Secretary of Health and Human Services. The MSCI World Index recorded its most significant weekly decline in two months as investors considered a slower pace of interest rate cuts.

Asia

However, Asian markets retreated after Beijing’s latest stimulus measures fell short of investor expectations.
The slowdown of the Chinese economy was marked by consumer prices rising at the slowest rate in four months in October, a result of falling food prices.
Consumer spending relies on a recovery in the housing market. With 70% of their wealth in the troubled real estate sector, Chinese households are cautious about spending.
Chinese factory-gate prices experienced an 11-month low, declining for the 25th month and highlighting deflationary challenges for policymakers.

UK supermarkets were warned of the effects of tax increases as grocery prices rose for the second month.
The annual increase is 2.3%, up from 2% last month. Retailers noted early Christmas shopping, with grocery sales hitting a yearly high despite rising chocolate prices.
Nervousness about the Budget caused a slowdown in the UK economy in Q3. The Office for National Statistics reported growth of only 0.1%, down from 0.5% in Q2, with declines in September. The primary factor was a slowdown in the service sector, including shops, bars, and restaurants.
Q3 growth figures reveal the UK lags behind the US, France, Germany, and Japan, highlighting the challenge for Chancellor Rachel Reeves, who stated that growth is the "number one mission" for the new government.”

Wealth Check

Would you turn to your financial adviser for guidance or support if you found yourself in difficult circumstances?

It could be a bereavement, unexpected redundancy, an accident, or even a physical or mental condition we were born with. Whatever the reason, 1 in 2 of us will face vulnerable circumstances at some point. 1

The latest chapter of SJP’s landmark consumer survey, The Real Life Advice Report, reveals that less than half of us turn to our financial advisers to help us cope with increased vulnerability.2

This is despite 1 in 4 respondents saying that financial advice had helped them feel less vulnerable in challenging circumstances.

Opinium surveyed just under 12,000 UK adults nationwide in two polls between May and August 2024 on behalf of SJP. The Report—our largest consumer survey to date—is based on interviews and real-life stories exploring the value of financial advice, our attitudes toward it, and its future.

What do we mean by vulnerability?

Two and a half million people across the UK first seek professional advice after a major life event or change.

A change doesn’t always mean a challenge. However, we who see traumatic events such as bereavement, divorce, a severe illness in the family, or dealing with a lifelong medical or mental health condition can impair our decision-making and knock our confidence. All of these can increase our risk of financial vulnerability.

So why did more than half (52%) of respondents say they wouldn’t contact their financial adviser?

“People can be reluctant to disclose vulnerabilities because they worry that it will negatively impact how they are perceived or how they’re treated,” says Anna Blake, Chair of the Vulnerable Clients Steering Group at St. James's Place.

Advice can be a force for good.

Anna says she’s seen a threefold increase in the number of clients identified as having vulnerability characteristics since July 2020. “As an industry, we need to get better at communicating our value and come together to address our gaps and champion our strengths,” she says.

“If we do so, we have an opportunity to make a real difference and demonstrate more clearly how advice is a force for good in supporting all clients at risk of vulnerability.”

We can help you

Protect your financial future with a trusted adviser by your side. Don't navigate uncertainty alone. Get in touch to secure peace of mind.

1 Financial Conduct Authority, 8 November 2023

2 The Real Life Advice Report was commissioned by St. James's Place. Opinium surveyed just under 12,000 UK adults between May and August 2024. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population. The quantitative data referenced is sourced from the first poll, which had a total sample of 7,995 respondents.

In The Picture

With last week's news that the Republican Party has secured complete control of Congress, the likelihood of President-elect Donald Trump's policies becoming a reality has increased. But what impact might this have on markets? The chart below illustrates a compelling reality over the past 50+ years: US stocks have provided positive returns for investors with a longer-term view.

“The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Speaking on Thursday, Federal Reserve Chair Jerome Powell dampened investors’ hopes of a further interest rate cut this year.

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David Gardner

David has worked with St James’s Place for sixteen years and has earned the esteemed reputation of being a multi-jurisdictional expert.
Chartered Insurance Institute (Personal Finance Society), David embodies the highest standards of professionalism and expertise. This membership signifies that he has met stringent criteria and is committed to providing exceptional financial planning services.
In addition to his affiliation with the Chartered Insurance Institute, David's credentials extend across borders. He is a Singapore Based , licensed adviser with the Monetary Authority of Singapore , showcasing his ability to navigate and comprehend the complex financial landscape of one of Asia's largest financial hubs. This licensure demonstrates his proficiency in offering tailored financial solutions to clients in Singapore and complying with the country's regulatory requirements. now you can connect with him in Dubai.