A recession in the UK now looks avoidable

US inflation figures yesterday showed that inflation is decelerating according to expectations, which lifted the FTSE 100 by 0.9%. Materials and consumer cyclical stocks performed well, boosted by China reopening its border.

The blue-chip index opened 0.5% higher this morning, tracking upbeat Asia trading on hopes that the Fed will soon about to ease its monetary policy.

A surprise growth in the domestic economy in November also boosted UK equities. This was partly due to higher spending in pubs and bars during the World Cup, as well as strong sales of the FIFA video game. If consumers keep spending, the country could narrowly avoid a recession. Economists also believe that the EU and US could skip negative growth altogether. 

The Office for National Statistics said GDP inched up 0.1% between October and November 2022. The Reuters consensus was calling for a 0.2% contraction. Output in consumer-facing services progressed by 0.4% last month.

 

Things to read today:

A trillion-dollar blind spot for asset managers (Financial Times)

Markets Are Locked in a Game of Chicken With the Fed (WSJ)

Britain May Avoid a Recession for Now as Consumers Spend (Bloomberg)