Market Overview
Nasdaq records the largest gain in nearly three weeks while Dow reaches a near two-month low. The semiconductor stock index rises nearly 7%, with Nvidia’s market value approaching $1 trillion, almost double that of Intel’s in a single day. Intel drops by 5.5%, leading the fall in Dow components. As concerns about debt default intensify, short-term US bonds due in early June see their yields break through 6.2% across the board.
European stocks decreased Thursday, as the Stoxx Europe 600 index SXXP, +1.15% finished down 0.32% to 456.18. The FTSE 100 index UKX, +0.74% weakened 0.74% to 7,570.87, the French CAC 40 index PX1, +1.24% fell 0.33% to 7,229.27 and the German DAX DAX, +1.20% fell 0.31% to 15,793.80. Among Stoxx Europe 600 constituents, technology company Allegro.eu S.A. ALE, +2.54% saw the largest decline Thursday, as shares dropped 6.9%
Asia-Pacific stocks mostly increased Friday, May 26, Japanese shares climbing for the second session. The Nikkei 225 Index NIK, +0.37% of Japanese companies increased 0.4% to 30,916.31, while the Hong Kong Stock Exchange was closed. The Shanghai Composite Index SHCOMP, +0.35% of Chinese companies gained 0.4% to 3,212.50, while The FTSE Straits Times Index STI, -0.01% of Singapore stocks was flat at 3,207.39. The KOSPI Composite Index 180721, +0.16% of South Korean stocks gained 0.2% to 2,558.81, while the S&P/ASX 200 Benchmark Index XJO, +0.23% of Australian stocks rose 0.2% to 7,154.80.
Chancellor backs interest rate hikes even if they push UK into recession
Chancellor Jeremy Hunt has backed interest rate hikes being used to calm soaring inflation even if they increase the risk of pushing the UK into recession. Mr Hunt insisted in an interview aired on Friday that the “only path to sustainable growth” is to bring down the high prices behind the cost-of-living crisis. The Bank of England has been hiking interest rates as one measure to tackle inflation, but they could raise them even higher than the 4.5% they currently stand at.
Mr Hunt said that prioritising measures to slow rising prices was necessary even if rate hikes damage the UK’s gross domestic product, or GDP, a measure of the size of the economy. Asked if he was comfortable with the Bank acting to bring down inflation even if it could precipitate a recession, Mr Hunt said: “Yes, because in the end inflation is a source of instability. “If we want to have prosperity, to grow the economy, to reduce the risk of recession, we have to support the Bank of England in the difficult decisions that they take. “I have to do something else, which is to make sure the decisions that I take as Chancellor, very difficult decisions to balance the books so that the markets, the world, can see that Britain is a country that pays its way – all these things mean that monetary policy at the Bank of England (and) fiscal policy by the Chancellor are aligned.”
Prime Minister Rishi Sunak pledged to halve inflation this year, making the promise in January when the figure stood at 10.1%.The Bank’s governor Andrew Bailey said there is still a chance the Government will meet the pledge despite the challenges. The International Monetary Fund has also upgraded its growth forecast for the UK, now expecting it to avoid a recession and grow slightly by 0.4%.Mr Hunt said “It is not a trade-off between tackling inflation and recession. “In the end, the only path to sustainable growth is to bring down inflation.”
Planning for a successful retirement
Achieving a long and successful retirement is the ultimate goal for many. They believe that if they put the effort into saving, investing and growing their retirement fund, the living will be easy. But in these days of complex pension rules and potentially lower returns, building up a pension is not the end of the story. Managing your money through retirement can bring a whole new set of challenges and risks The key challenge is how to convert your accumulated assets – your investments, pensions and savings – into an income that will sustain you throughout your retirement, particularly when you have no idea how long you will live for. Known as the decumulation stage of retirement planning, it is often likened to mountain climbing as the most difficult part of a climb isn’t always the ascent to the summit. More accidents actually happen on the way down. And it’s the same with your finances. Becoming increasingly reliant on generating an income from your assets presents additional risks which need to be managed to ensure your retirement is a success.
What are the key risks?
Compounded over a long time, inflation can have a significant impact on the real value of your money. If you are retired and living on your savings, it can make it increasingly difficult to maintain the standard of living for which you planned. The latest Jersey retail price index, published in March 2023, is 12.7%, which is probably significantly higher than most of your returns. This means that, over time, you are losing money in real terms. There is also the likelihood that the quarterly retail price index published does not reflect your particular expenses, which could be higher Medical advances and better health mean we are typically living longer than ever before, but these benefits come with the risk that you could outlast your wealth .In the UK, a couple in their early 60s today have a 25% chance that at least one of them may join the exclusive centenarian club. Many people underestimate their longevity, but it’s a possibility you should take into account to ensure your financial future stands the test of time.
If investment returns are weak in the earlier years of retirement and coupled with potentially high withdrawals, the two can dramatically impact the long-term value of your portfolio, irrespective of whether you see higher investment returns later on in your retirement. While sequence risk is often a matter of luck, there are steps you can take to mitigate its impact. While saving and investing, you will probably have taken advice on the best way to achieve your goals. Once you reach retirement, however, it is equally important to consider the most effective way to draw an income from the wealth you have accumulated. This requires an understanding of which assets to sell in order to fund retirement expenses and which assets to buy to ensure your portfolio does not erode in value – all without taking on too much risk and volatility. Your pension and non-pension assets should be considered alongside your overall, long-term goals when determining which assets to draw on first. Alongside the wealth planning support, you should make sure your investment portfolios are being actively managed. This means an experienced investment manager will ensure your portfolio is suitably diversified and contains a wide range of asset classes – such as funds, equities, bonds and property etc – that can help to mitigate the effects of inflation risk. They can also help you to benefit from the various underlying characteristics of individual asset classes in order to meet your goals.
As well as actively managing your portfolio assets to generate returns, it is equally important to meet your retirement withdrawals. This is where a dual portfolio approach can help. While not appropriate for every client, many can benefit when their portfolio is split and managed across two levels of risk. In this scenario, a cautious risk portfolio is designed to be less volatile and generate steady returns to meet your withdrawal profile, while a higher-risk portfolio aims to provide longer-term growth over your retirement period. The more cautious portfolio also works to protect more of your capital from large market movements, due to its mix of asset classes, and helps to mitigate sequence risk. The higher-risk portfolio, meanwhile, is usually invested in riskier assets, such as equities and property, which help you to manage both inflation and longevity risks. Ultimately, however, your choice of a wealth manager is not just down to technical expertise, but also a question of trust and whether they really understand your needs. You should be confident that the same due care and attention paid to you today will be sustained in the decades to come – to help you achieve financial success in retirement.
IT issue causes mass cancellation of British Airways flights at Heathrow
British Airways has apologised after an IT issue caused the cancellations of domestic and European flights on Thursday, as Britain heads into the Bank Holiday weekend. There were more than 50 cancelled British Airways flights departing Heathrow on Thursday with the airline urging passengers to check their flight status before going to the airport today. There were more than 20 flights that had been cancelled or still currently delayed that were meant to land at Heathrow on Thursday. Some flights that are due to depart Friday evening have been notified their flights are delayed, adding to the stress for customers. It comes as the airline had to cancel flights just before Christmas due to IT issues, and in 2017 when hundreds of flights from Heathrow and Gatwick airports were cancelled due to an IT failure.
A statement from British Airways released just before 10pm on Thursday said “we’re aware of a technical issue, which we have been working hard to fix”. “Due to high call volumes please only contact us if you’re due to travel in the next 48 hours. ”A tweet from British Airways at 11:27pm on Thursday said their “systems are back up and running” but there might still be “intermittent issues” .A spokesperson from Heathrow Airport said the cancellations are not due to airport strikes. “British Airways is currently working to resolve a technical issue with a number of its systems. We have additional Heathrow colleagues on-hand in the terminals to provide passengers with any additional assistance required.” The delays and cancellations are expected to continue on Friday. It comes as security guards at Heathrow Airport launched a three-day strike on Thursday in a dispute over pay. Members of Unite have already held 15 days of industrial action, including over the busy Easter period.
Jersey Airport numbers make strong recovery but remain short of pre-pandemic levels
The Island experienced a strong climb in passenger numbers at the Airport last year but is still failing to match pre-pandemic levels, according to Ports of Jersey’s latest annual report.A total of 1.3m passengers were welcomed through Jersey Airport in 2022 – nearly double that of 2020 but still significantly down compared to the last pre-Covid year of 2019, where the figure was more than 1.7 million. However, the peak summer months of July and August saw monthly volumes not achieved since April 2019. The report states: ‘Our busiest day and weekend was the August bank holiday, when more than 17,000 passengers travelled through Jersey Airport.’
It adds that the overall recovery in passenger numbers was among the fastest of all the airports in the UK and Crown Dependencies. Additionally, Ports achieved an operating profit of £1.9m, up from a loss of £4.3m in 2021. However, the report also states the aviation industry ‘remains under immense pressure’, not only from the pandemic recovery but also the cost-of-living crisis, with high inflation driving up running costs against ‘already low profit margins’ .Ports chair Mark Chown described the impact of the pandemic on the aviation sector as ‘stark’, with many airlines reducing their services and others – such as Flybe – exiting the market. ‘Nevertheless, with aviation passenger volumes in 2022 recovering, but still not matching pre-pandemic levels, we are confident that this trend will continue. Building on the close working relationships developed with our airline partners during the pandemic, we have secured new routes and signed new medium-term agreements to increase our route network across the UK and into Europe,’ he added. This includes the inaugural Jersey-to-Amsterdam route announced by easyJet at the end of last year, as well as a five-year agreement with British Airways projected to carry more than two million passengers between Jersey and BA’s global hub in Heathrow.
Island has too many big houses and not enough smaller homes’
Jersey will see a drop in demand for larger properties – particularly four-bedroom houses – but faces a shortage of smaller homes, a report has suggested. Statistics Jersey’s Future Housing Needs report, published yesterday, uses responses given by Islanders in the Jersey Opinions and Lifestyle Survey last year to provide estimates of Jersey’s potential housing requirements for 2023 to 2025. Not including the supply of new homes, the report estimates a potential shortfall of 1,590 units, primarily one-bedroom flats and one and two-bedroom houses, and an anticipated surplus of 980 – mostly larger – properties. Housing Minister David Warr said the report ‘confirmed’ that there was a need to keep building, describing the construction of smaller units as ‘the right direction’. ‘A lot of people keep saying we are building rabbit hutches, but we are building communities. When we create these one- and two-bedroom properties – for which there is clearly a demand – we need to ensure we do so with shared space and proper amenities.’ He noted that Environment Minister Jonathan Renouf was currently seeking feedback on draft planning guidance for the delivery of affordable homes on rezoned housing sites across Jersey.
‘Obviously [the demand for housing] relates to the Bridging Island Plan sites, so it’s important that those come through and that we develop the drainage strategy alongside that,’ Deputy Warr continued. ‘The third point is about how we can help in terms of affordability, for example shared equity and things like the Andium Homebuy scheme [where first-time buyers can purchase a home with a deferred payment of up to 25% market value] which is already in place but could be updated and revised. I am determined to consider all of the options for what is a complex matter, so as to not implement the wrong one. ’St Brelade Constable Mike Jackson, who sits on the Environment, Housing and Infrastructure Scrutiny Panel, agreed the data showed a ‘clear’ need for smaller properties. ‘What we are seeing is developers building three- and four-bedroom properties to try to maximise profit, which isn’t necessarily being assimilated by the need in the market,’ he said. ‘I am not blaming developers, but we need that balance [in property types] and planning should make that clear through their policies.’
Over 1,000 motorbikes head out on the road
Jersey’s largest motorcycling community event returns this weekend. Up to 1,200 bikers are expected to take part in the tenth Big Ride Out. The event, which is organised by Holidays for Heroes Jersey, will also see spectators lined up along the route from St Catherine’s Breakwater along the coast to St Ouen’s Bay. The money raised will go towards providing holidays in Jersey to injured servicemen and women and their families. Richard Harwood, of Holidays for Heroes Jersey, said the event would cause ‘minimum inconvenience to other traffic’. Although honorary officers will support the event by policing key junctions and roads, there will be no official road closures. He added: ‘We have worked hard with parish officials and other authorities to make sure this event runs as smoothly as possible’.
Paying tribute to Lee Butler, who previously organised the event, Mr Harwood said: ‘ Having passed the baton on, we want to ensure it’s as successful as it has always been’. The Big Ride Out is sponsored by Islands Insurance and the Mansell Collection. Greg Mansell, chief executive of the Mansell Collection, said: ‘The Ride Out is the pinnacle of the biking year. We are very proud to support it’ .Jim Purkiss, sales and corporate relationship director at Islands Insurance, said they were committed to supporting local events and community initiatives ‘and they don’t come much bigger than the Big Ride Out’ The event starts at 9am on Sunday, and any riders interested are asked to register online beforehand at themansellcollection.co.uk/events/the-big-rideout-2023.
Netball legend to take on Jets coaching role
Islander and England netball legend Serena Kersten is set for a new role coaching Jersey’s best players, following the retirement of Team Jets head coach Linda Andrews. Ms Andrews has been the head coach of Team Jets since it was founded in 2005. She officially stepped down at the end of the season, having worked alongside Mrs Kersten as part of an extended handover period. Mrs Kersten, née Guthrie, won 100 England caps and captained the Roses on 28 occasions – including at the 2019 World Cup. She was also part of the side which won a gold medal at the Commonwealth Games and was voted the best centre-court player in world netball for 2015. In 2019, the former Le Rocquier student was made an MBE for her services to netball.
Last year, Mrs Kersten retired from international and elite domestic netball and returned to the Island to start a family. She said: ‘It’s exciting for me to be coaching the Jets, especially because this is a team that I hold very close to my heart. I’m passionate about Jersey netball and it’s where I started my career. ‘The goal going forward is the national and international leagues. I want to push the girls to their highest potential, to play in the highest league that they can, which might mean Premier League 2. There’s a lot of talent in the Island right now and we have a real chance of getting there again over the next couple of years. ’Ms Andrews – who is also president of the Jersey Netball Association – said she was leaving with ‘mixed emotions’ but feels comfortable ‘handing over the reins to Serena’.
Nigel Farage planning a move to Jersey or Guernsey?
The former UKIP leader told ITV’s Robert Peston this week that he may make the journey across the water – if Brexit was a failure. The TV host asked: ‘You also famously said that if you were persuaded that Brexit had definitively failed that you would move abroad. Where would you fancy living?’ Without hesitation, Mr Farage responded: ‘Oh, the Channel Islands.’ The clip received mixed responses on social media, with Robbie Andrews writing on Twitter: ‘As a Jerseyman speaking… Guernsey can have him’. In turn, a user called Peter Cunneen suggested the Minquiers as a possible home. Mr Farage has spent time in Guernsey’s Cock and Bull Pub, and spoke to the JEP in a Saturday Interview in March 2013.
As he was campaigning for Brexit at the time, he spoke in emotive terms about what he saw as the EU’s attempts to overpower the UK government. Why should Jersey – already outside the EU at the time, but linked to it through Protocol 3 of the UK’s 1973 Treaty of Accession – care about the EU?, he was asked. Mr Farage answered that the EU was harmful to the financial sector. His advice for Jersey at the time was to stick with the UK. After the interview, he was spotted ‘lighting up with a small gaggle of office smokers near Church House’. Maybe he will be joining them again soon…External Relations Minister Philip Ozouf reacted to Mr Farage’s interview by saying that the former political leader’s ‘external perspective would be informative’, and added a ‘folded hands’ emoji, which is generally used to say please or thank you.