21st February 2022
The Cambridge Weekly – 21 February 2022
Investors anxious for storms to blow over
Another turbulent week in global stock markets on the back of little in terms of new news, but plenty of speculation of what may lie ahead. At the end of last week, real storms disrupted our lives while markets continue to brace for what may, or may not, come to pass.
Why UK stock markets are an unexpected ray of sunshine
It has been a difficult year so far for equity investors. Stock markets have fallen in most major economies, prompted by monetary tightening at the US Federal Reserve (Fed), geopolitical tensions in Ukraine and a cost-of-living crisis hitting consumers across the globe. The S&P 500 index is down 8% year-to-date, while the MSCI World index has fallen 7%. That is the global picture at least. At home, things look a little different. The FTSE 100 stands out as one of the few major indices to post a positive return so far this year. Granted, the 2% gain is not much, but it shows a rare bout of outperformance from Britain’s biggest companies.
‘Build Back Better’ bites the dust
US President Joe Biden’s ‘Build Back Better’ Act is dead, according to Democratic Senator Joe Manchin. He should know, since Manchin effectively killed it. Biden’s $1.75 trillion fiscal plan was the great hope for progressives in America’s ruling party – promising ‘soft’ infrastructure spending, environmental transition and strong growth in the years ahead. Many investors were equally excited, hoping a large and sustained fiscal injection would prolong the post-pandemic recovery. With an evenly divided US Senate, Biden needed all his troops onside to push the plan forward. When Manchin publicly retracted his support (even for his own watered-down version of Biden’s bill), there was little more the White House could do.