Financial Update – October 2022
In the UK, the beginning of the month finally brought an end to the Conservative leadership contest, as Liz Truss defeated Rishi Sunak and replaced Boris Johnson as Prime Minister. With the sad death of Her Majesty The Queen two days later, Truss became the first PM to serve both a King and Queen since Winston Churchill. Liz Truss must have enjoyed the shortest honeymoon period of any Prime Minister: by the end of the month, the Telegraph was running a comment piece entitled‘ Liz Truss has shocked her own allies and is dangerously close to the edge’.
Much of the blame for this can be laid at the door of new Chancellor Kwasi Kwarteng’s ‘fiscal event’ (or mini-Budget), which worried both the markets and Conservative backbenchers in equal measure: one opinion poll immediately after the speech gave Labour an astonishing 33% lead.
As we will see below, the pound fell spectacularly during the month, although it subsequently recovered some of the lost ground. Also falling were the world’s stock markets: only one of the markets on which we report made any headway in the month, with some suffering double-digit falls.
This wasn’t surprising with continuing worries about inflation and major economies around the world flirting with recession. Throw in the continuing war in Ukraine, Putin’s apparently increasing irrationality, the attack on the Nord Stream pipeline and continuing tensions between the US and China, and September was a month when good news was hard to find.
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