Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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May 10, 2024

Q1 UK GDP grew faster than expected

Macro

Commodity, oil, and precious metals prices firmed overnight. The $ weakened, but the £ has recovered above $1.25 despite growing rate cut expectations. 

UK GDP in Q1 is estimated to have grown at 0.6% versus -0.3% in Q4 last year, formally signalling the end to the UK’s short, shallow recession in H2 2023. Manufacturing, Industrial production and import-export data were all better than expected. Construction orders and output are still negative.

Forecasters have consistently underestimated the UK economy’s resilience and ability to fend off inflation. With a faster recovery than forecast, the prospect of lower rates and a stable currency, the outlook for the UK in terms of its appeal to global capital is rapidly improving. 

UK Companies

Rightmove updated the annual house price growth to 1.7%, the highest for 12 months. Activity levels in January and April 2024 are 17% higher than in the same period last year. Completion times remain lengthy, with an average of five months. The rental market remains very busy, with an 18% increase in listings in the first four months. The expectation is that agent branches will increase by up to 2% during 2024.

The perma-bears at Ruffer issued their monthly investment report saying that the current extended market positioning in US equities and credit is at odds with the geopolitical and economic risks. Furthermore, its analysis suggests that liquidity conditions will remain challenged through the coming months. It maintains a defensive posture by using cash and cheap derivative protection to prepare for an environment that will eventually be more friendly to risk-taking.

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Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.