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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
FTSE 100 hits fresh all-time high as inflation and recession fears ease
The UK’s blue-chip shares index has hit a fresh all-time high, only days after a previous record was set last Friday.
The FTSE 100 index rose by almost 1% on Wednesday morning, eventually peaking at 7934.30 points, surpassing the former high of 7,906.58 points set on 3 February.
Before that date it had taken more than four years to surpass the previous high set in May 2018.
The FTSE 100 ended the day at 7885 points, up 20 points or 0.25%, but below last Friday’s record closing high.
Global markets have rallied in the first weeks of this year on hopes that inflation may be easing, after the shock prompted by the soaring energy prices seen globally.
The FTSE began to rally at the start of the year, as investors welcomed China’s decision to relax Covid-19 restrictions, which could further support global growth. They have also been heartened by the slide in US inflation, as well as the country’s strong employment figures.
The FTSE 100’s rise has arrived amid growing hopes that the UK could avoid a recession, with the National Institute of Economic and Social Research forecasting Britain was now likely to avoid two quarters of contraction in 2023.
Pakistan IMF: Crucial bailout deal eludes negotiators
Eleventh-hour negotiations between Pakistan and the International Monetary Fund (IMF) have failed to unlock $1.1bn in crucial funds aimed at preventing the country from going bankrupt.
A deepening economic crisis has all but emptied Pakistan's foreign exchange reserves, leaving it barely enough dollars to cover a month of imports and it is struggling to service sky-high levels of foreign debt.
The IMF team, which leaves Islamabad on Friday, said "considerable progress" had been made after 10 days of talks.
In January annual inflation soared to over 27%, the highest it's been in Pakistan since 1975, and there are mounting fears for the economy in a pivotal election year.
This week the rupee sank to a historic low of 275 to the dollar, down from 175 a year ago, making it more expensive for Pakistan to buy and pay for things. Alongside this, the lack of foreign currency is one of the most pressing of Pakistan's problems.
Pakistan, like many countries, is suffering heavily from the coronavirus pandemic and Russia's invasion of Ukraine, following which global fuel prices have soared. Pakistan relies heavily on imported fossil fuels and importing food has also become more expensive.
As for bailouts, Pakistan is no stranger to them. The country - which has a massive military budget and years of debt-driven infrastructure spending - has long failed to rid itself off populist subsides and stabilise its economy to suitable levels.
EU set to avoid recession following gas price fall
The EU is set to dodge a previously forecast recession as falling gas prices, supportive government policy and firm household spending boost the region’s outlook, according to the latest outlook from the European Commission.
Brussels lifted its predictions for EU growth this year to 0.8 per cent, stronger than the 0.3 per cent forecast in November, and said the region would avoid a technical recession — defined as two successive quarters of economic contraction.
The euro area is forecast to expand 0.9 per cent in 2023, better than the 0.3 per cent that the commission expected in its previous prediction towards the end of last year.
The spectre of shutdowns in Russian gas supplies coupled with falling industrial output and flagging business sentiment fanned fears last autumn that the EU was heading into a deep recession.
However, a mild winter and government subsidies have also helped ease pressure on households and businesses, as Europe’s gas benchmark price fell well below the levels recorded during the summer of 2022.
The region’s economy managed to avoid a contraction during the final quarter of last year — in part due to strong growth figures for Ireland bolstering the data.
