Inflation at target level

June was a big month for the Bank of England as inflation fell from 2.3% to the government’s target of 2%.1 This represents what is now years of policy to get inflation under control.

Just keep in mind – if inflation is at 2%, it means prices are still rising. So while it’s good news to be at the government’s target ‘normal’ level, if you’re not getting at least 2% interest on your savings or gains on your investments – inflation is eating away at the value of your money.

 

UK expects Labour victory on 4 July

It’s not necessarily news, but as the election date draws nearer, the polls are pointing ever more surely to a Labour victory in the UK’s general election on 4 July.

At the time of writing, voting intentions showed Labour on 41%, the Conservatives on 21%, and Reform on 16%. The Lib Dems trailed behind the top three with 12%.2

The rise of Reform is a matter for another update, but it echoes trends we’re seeing across Europe with the increasing popularity of right-wing parties. Six EU countries currently have right-wing parties in government (Italy, Finland, Slovakia, Hungary, Croatia and the Czech Republic).3

It remains to be seen what a Labour government means for things like ISAs and pensions, topics that the party has been relatively quiet on in the election campaign.

 

ECB cuts interest rates

The European Central Bank’s (ECB) benchmark deposit rate has been reduced by 25 basis points to 3.75%. This is the first time in five years that Europe’s central bank has cut rates – and it reflects a shift away from policies keeping inflation in check as the number one priority.

Inflation in the Eurozone has been falling for over a year – it stood at 2.6% in May 2024, down from 7% in April 2023.4

 

FTSE finishes flat

The FTSE 100 finished June down by 1.19%.5 That’s not something to worry about – market benchmarks can be flat before elections as market activity slows while investors wait for results to come in.

But as we mentioned last month – the UK is a relatively stable country, and elections rarely have a dramatic long-term effect on the performance of market benchmarks.

 

S&P on the up

Across the pond, the S&P 500 was storming upwards with a gain of 3.35% for June.5 The rise was led by the tech titans – regular names Alphabet,  Apple, Microsoft, and NVIDIA are all now $2 trillion companies, and they were joined on Wednesday 26 June by Amazon, which reached a $2 trillion market capitalisation for the first time.

Capital at risk. All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.

 

1 ONS, June 2024

2 Politico, 27 June 2024

3 Politico, May 2024

4 European Commission, May 2024

5 Google Finance, Monday 3 June – Friday 28 June 2024