Market Update – 22nd November 2023.

23rd November 2023

Today Chancellor Jeremy Hunt unveiled the government’s tax and spending plans in the House of Commons. The Chancellor delivered the Autumn Statement detailing tax cuts, pension reforms and promised 110 measures to encourage growth within the private sector.

Hunt made tax breaks for businesses permanent allowing them to offset investment in machinery, IT and equipment against Corporation Tax. This is seen as positive for the broader UK market encouraging investment and economic growth which in turn could help bring inflation down.

Some other highlights included cuts to National Insurance aimed at trying to gain votes ahead of the next general election. The main rate for employees will be cut from 12% to 10% from 6 January 2024 which should increase consumer confidence and spending (which could threaten the Bank of England’s progress in their fight against inflation). There was good news for pensioners as Hunt ruled out any plans to adjust the triple lock mechanism; state pension will increase by 8.5% from April 2024.

For further information on the Chancellor’s budget please view our full commentary here.

Elsewhere, the annual inflation rate in Hong Kong rose to 2.7% in October 2023, accelerating from 2.0% in the previous month. This is seen as positive for the Chinese economy given concerns earlier in the year surrounding lack of inflation.

On Tuesday, the Federal Reserve released the minutes from their latest policy meeting. Unsurprisingly for markets, policymakers maintained their hawkish tone providing their outlook for policy going forwards. The minutes revealed that the Fed are in no rush to start cutting interest rates and that discussions were held about leaving policy ‘at a restrictive stance for some time’.

Still to come this week we have UK and US PMI manufacturing services data. On Friday we also have UK consumer confidence and Japanese inflation.

Kate Mimnagh, Portfolio Economist