US stocks had their best week since February last week, as the S&P 500 Index closed at a record high. The index of blue-chip US stocks rose 0.95% on Friday, bringing its weekly gain to 3.6%.
The Nasdaq Composite Index had a similarly good week, rising by 3.39%.
The US Bureau of Labor Statistics reported on Friday morning that US inflation rose by 6.8% over the last year. Markets appeared to have been expecting a number in this region, or have at least ‘priced in’ the high figure, because the data didn’t cause markets to lose their gains for the week.
Meanwhile, the spread of the Omicron variant continued to impact markets last week. On Wednesday night, the UK announced the implementation of its ‘Plan B’ restrictions in response to rising case numbers, which are effective from today. The new measures include guidance to work from home, plus mask-wearing for many indoor venues.
Markets are still weighing up emerging data on how successful current vaccines are against the new variant. There was some good news on this front last week, when the UK Health Security Agency wrote that booster shots could be up to 75% effective against symptomatic infections. Similarly, last week, data from a hospital at the centre of the outbreak in Pretoria, South Africa, suggested that the variant is causing less severe symptoms in patients than previous waves.
“Investors are increasingly optimistic that Omicron won’t prove as bad as feared,” wrote Adrian Frost at Artemis, which manages funds for St. James’s Place.
However, Frost notes that there are still risks on the horizon for investors. One of those is that the Federal Reserve’s tapering of economic support may be faster than expected, which might unsettle markets if investors perceive the central bank to be acting too fast too quickly.
In Asia last week, Chinese real estate developer Evergrande failed to make interest payments on some of its bonds – leading ratings agency Fitch to state that the company is in ‘restricted default’.
With over $300 billion in liabilities, the company’s failure to pay will have an international impact. When news first broke about the company’s issues in September, there were fears that there could be a large fallout from the event. However, fears of a 2008-style contagion from Evergrande’s difficulties have subsided since then.
Finally, last week Olaf Scholz was elected as the German Chancellor. Scholz will lead a three-way coalition between the Social Democrats, Greens and liberals. His first task will be trying to tame COVID-19, but his pledges range from modernising the country and implementing progressive social policies.
Good food and time spent with the family are important ingredients for an enjoyable festive season, but when it comes to presents, why not think a bit more creatively than a pair of socks or an unwanted gift set?
Instead, you could consider giving a financial gift to your nearest and dearest. It’ll not only make you and the recipient feel good, but, if you take the right advice, it could also save you a lot of money in tax.
For example, as a parent or grandparent, providing a children’s pension is a thoughtful gift to help improve a child’s future finances.
When children enter the workforce a decade or more from now, for many, paying into a pension is possibly the last thing they will be thinking about – it is going to be difficult enough to contend with house prices, technological changes and salary negotiations.
A children’s pension must be set up by a parent or guardian, but after that, anyone can contribute to it on the child’s behalf. Setting one up is relatively straightforward, but you should discuss options with your St. James’s Place Partner and involve other members of the family when coming to a decision.
Similarly, providing more flexibility over the medium term than a junior pension, Junior ISAs are a tax-efficient savings opportunity for children. They can be set up by a parent or guardian for any child under 18 who lives in the UK (there are some exemptions for children living outside of the UK).
The annual savings limit for Junior ISAs is £9,000 and the child is unable to withdraw cash from the account until they are 18, making it accessible far earlier than a junior pension.
Broadly speaking, there are two options – a Stocks & Shares Junior ISA or a Cash Junior ISA. Again, speak to your adviser for a rundown of the best options.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Please not that St. James’s Place does not offer a Cash ISA.
How do we aim to limit risk? Watch this short animation to explore the ways in which our asset class building blocks operate, by utilising different investment styles as part of a multi manager structure.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
“Everyone eligible aged 18 and over in England will have the chance to get their booster before the new year”
Boris Johnson announces an expansion of the vaccination programme on Sunday night.
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
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