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A real recovery? #finance

The Federal reserve increased interest rates this week. So is this the first sign of a genuine global economic recovery? With a low oil price driving a recovery and stabilising inflation we could now have a chance for growth.

China has been doing what it can to keep growth going including controlling the value of the Yuan and stimulating domestic demand. Quantitative easing in the US kick-started their growth and the same is happening in Europe.

How about the UK? We seem to have very slow growth, if any. Austerity means less money going into the shops and this is adding to the woes of the big four supermarkets. Shares in Tesco can be picked up for around 146 this morning. That’s a drop of £1 a share since May. Is that because of their accounting scandal or competition from the budget supermarkets? It seems political to me with many people struggling because of austerity. Tesco has consolidated their business and has prioritised the stores in the UK, so sales over Christmas should improve the share price after Christmas. The price now seems to be very low.

This week saw some share prices recover and the market less averse  to risk. There is still a tendency to go for the safety of larger companies, so the AIM market has been out of favour. There are a few bargains across the market, but shares such as Verona Pharma dropped suddenly as the FTSE 100 fell and are now slowly recovering. Small pharmaceuticals like Verona and Immupharma with its new drug Lupuzor are gaining ground. I think both those will eventually become multi-baggers for me.

Overall investors are still playing it safe and reacting to bad news by moving to less risk. With virtually zero inflation, the 3.9% I’m getting with Zopa seems quite attractive at the moment.  This week has been a little better on the stock market, but it isn’t the Santa rally I was hoping for.

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