As we move towards autumn, signs of volatility are creeping back into markets. One of the main questions at the forefront of investors’ minds is how soon the Federal Reserve (Fed) will move to raise interest rates. Some market experts, and even some Fed officials have been pointing at reasons why the US central bank should look to “normalise” interest rates. Meanwhile, a fall in the oil price, following a report from the International Energy Agency forecasting a continuing supply glut, added to global market turbulence.
UK holds steady
It was a busy week for UK data. On Tuesday, a report from the Office for National Statistics showed that the UK annual inflation rate held steady at 0.6% in August, just short of the 0.7% forecast by economists. Import prices have risen sharply, now 7% higher than August 2015 following the recent fall in the pound. For now, however, high street prices are unaffected by sterling’s decline – it appears companies are managing to absorb the effects of the weaker pound, rather than passing it onto their customers.
On Thursday, members of the Bank of England’s monetary policy committee unanimously voted to leave the main UK interest rate at 0.25%. Another cut before the end of the year remains a possibility. For the moment, the UK labour market appears unruffled by Brexit vote: both the unemployment and the employment rate held steady in the three months to the end of July.
These reassuring figures helped the FTSE 100 put its turbulent start to the week aside. The index closed at 6,730 on Thursday, down only 0.7% for the week. This compared to a fall of 1.5% in the FTSE Europe (ex-UK) index, while US stocks enjoyed a positive week, with the S&P 500 index climbing 0.9%.
Sorting the wheat from the chaff
German chemical giant Bayer has this week announced confirmation of its $66 billion takeover of US crop producer Monsanto. Bayer’s chat-up line for the controversial GM seeds business was far from corny. It values Monsanto’s shares at $128 each, a fifth higher than their closing price on Tuesday. Given that the deal follows a wave of consolidation in the industry, and the fact that the combined business will control more than 25% of the world’s supply of seeds and pesticides, it is likely to face huge regulatory hurdles.
Jean Claude junks UK politicians
European Commission President Jean-Claude Juncker gave his state of the union address this week. Blaming Brexit on “40 years of lies by British politicians”, he deemed the European Union (EU) to be facing an existential crisis, while suggesting the UK will not have access to the single market when it leaves.
Meanwhile, Herman Van Rompuy a former head of the European Council, warned that Brexit negotiations might not start for another year, until a new German government is in place. On Friday EU leaders meet in Bratislava, without Britain, to look to the EU’s future after Brexit.
And finally…
Looking at some of our politicians, we can be forgiven for thinking: How on Earth did they get elected? Spare a thought, then, for Gylve Fenriz, a member of Norwegian death metal band Darkthrone and (reluctant) new kid on the block in local politics. Fenriz, whose seminal works include titles such as ‘Total Death’, ‘Ravishing Grimness’ and ‘Plaguewielder’, agreed to run for a backup town council seat in Kolbotn in the Oslo commuter belt.
“I said yeah, thinking I would be like 18th on the list and I wouldn’t really have to do anything,” he told music site CLRVYNT. The election campaign consisted of a picture of Fenriz holding his cat, named Peanut Butter, and the catchy slogan: “Please don’t vote for me.”
But the Darkthrone man has been duly elected. “Basically, I have to step in when the usual people who go to the big meetings are sick or something. Then I have to go sit there and feel stupid among the straight people.”
“It’s really boring,” he added.
