I can tell when we are at the high point (if that is the right way of looking at it) of summer when the number of emails in my inbox diminishes to a trickle. Companies are still reporting their half year results and economic data continues to flow – not all of which makes pleasant reading. But analysts and brokers clearly have other things on their minds, if the lack of comments on what it all might mean is anything to go by.
That said, there is something of a summery feel around – both for the weather and our market. True, our benchmark index has not exactly set the world on fire during recent trading, but it is higher than it was two weeks ago. Anyway, we are in the middle of the holiday season, with many of the market’s most active participants on bucket and spade duty, so we shouldn’t be too surprised at the lack of reaction to current events. Still, at least the US stock market does appear to be stabilising.
But activity is subdued – and this despite growing concerns that a cost of living crisis is due to overtake us all in the autumn. How best to deal with this is becoming part of the mantra being issued by the two contestants in the race to be Prime Minister. The battle between them has become increasingly bad tempered, which is a pity as the task facing the new incumbent of Number 10 will have a tough task on his or her hands, particularly in view of the increasing likelihood of industrial action in a variety of sectors.
For investors we seem to be in a wait and see environment. Inflation seems set to rise further, a lengthy recession is on the cards, according to the Bank of England, and geo-political tensions are hardly diminishing, with China flexing its muscles and no end in prospect for the war between Russia and Ukraine. The recommencement of grain shipments from Ukraine’s Black Sea ports is a dim beacon in an otherwise bleak scenario.
Indeed, it is a wonder that more nervousness is not present in the market. Perhaps it is the lack of attractive alternatives that is keeping investors on-side. Inflation does, after all, devalue cash and bonds over time and interest rates, while rising, are hardly at levels that will encourage investors to leap on board. Perhaps the best advice is to enjoy the hot, sunny weather and to keep our fingers crossed for better news in the future.