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Market Update from Aled Phillips

By Niche, 15th Dec 2021
2 min read

As we near the end of 2021, Chartered Financial Planner and Operations Director, Aled Phillips, provides a market update after another positive but uncertain year in financial markets; volatility is expected to continue.

The key drivers for this expected volatility are:

  • The themes that have driven markets during 2021 will continue to dominate activity, namely, Covid, inflation, growth, stimulus and valuation.
  • With the emergence of the new Omicron Covid variant, over the weekend we saw Prime Minister, Boris Johnson, warn of a “tidal wave” of infections in the UK. We had already seen a sharp selloff in markets when Omicron first emerged, which quickly reversed, and the market again opened positively at the start of this week.
  • Inflation: the debate between transitory or structural continues but rhetoric by central banks is beginning to change and the view that rising inflation is transitory is being challenged.  Supply constraints, due in part to continued Covid measures have remained in place and the longer they do so the chances increase that higher inflation becomes more entrenched.  
  • Central banks in the US and UK have already indicated that the stimulus that has supported the economies through this pandemic will start to be unwound.  Tapering in the US could be faster than originally expected with the prospects of the first interest rate rises implemented in Q2 2022.   These moves in interest rates will make the overstretched valuations in areas such as technology more challenging for investors to overcome.
  • With unemployment levels remaining low and labour shortages in a number of sectors due to the “great resignation” (employees not coming back to the workplace after the pandemic), global growth for next year is expected to be positive and with higher interest rates not generally favouring bond markets – equities (stocks and shares) remain a potential asset class of choice. 
  • All the above is being played out in an uncertain environment.  Covid and inflationary pressures will have a psychological impact on consumer spending which could dampen growth expectations – with these uncertainties still playing out volatility is expected to continue into the end of the year and the start of 2022.

It is important to note, that these short-term movements in financial markets will rarely have an impact on your long-term financial plan, but should you have any queries please don’t hesitate to contact your financial adviser.


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The contents of this article do not constitute financial advice in any way; if you have any concerns about your finances you should talk to your financial adviser. The value of your investments can go down as well as up.

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You can contact us on 01633 859555 or info@nicheifa.co.uk. Initial meeting is free of charge.
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