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D-PIMS Weekly Market Update - Week of 12th to 18th December 2022

Today’s Monday update:

Over the course of last week, market moving headlines were mostly related to economic matters:

• On Monday, people queued outside fever clinics at China's hospitals for COVID-19 checks, a new sign of the rapid spread of symptoms after authorities began dismantling stringent measures against the disease. Three years into the pandemic, China is moving to align with a world that has largely opened up to live with COVID, making a major policy change. It has dropped testing prior to many activities, reined in quarantine and is preparing on Monday to de-activate a mobile app used to track the travel histories of a population of 1.4 billion people. Authorities continue to urge mask-wearing and vaccinations, particularly for the elderly. But with little exposure to a disease kept largely in check until now, China is ill-prepared, analysts say, for a wave in infections that could heap pressure on its fragile health system and drive businesses to a halt.

• On Tuesday, figures showed that U.S. consumer prices rose less than expected for a second straight month in November, resulting in the smallest annual increase in inflation in nearly a year and giving the Federal Reserve cover to start scaling back the size of its interest rate increases. In the 12 months through November, the CPI climbed 7.1%. That was the smallest advance since December 2021. The annual CPI peaked at 9.1% in June.

• On Wednesday, Britain's inflation fell more sharply than expected in November to 10.7% from October's 41-year high of 11.1%, according to the official consumer prices data, offering some comfort to the Bank of England (BoE) as it prepares to raise interest rates again. Economists polled by Reuters had forecast that the inflation rate would slip to 10.9%.

• On Thursday, The Bank of England raised its key interest rate to 3.5% from 3% on Thursday, its ninth rate rise in a row as it tries to speed inflation's return to target after price growth hit a 41-year high in October. The BoE's Monetary Policy Committee voted 6-3 in favour of the move and said "further increases in Bank Rate" may be required to tackle what it fears may be persistent domestic inflation pressures from prices and wages. However, two policymakers, Silvana Tenreyro and Swati Dhingra, who had opposed the scale of November's increase, said it was now time to halt rate rises entirely, as what had been done so far was "more than sufficient" to get inflation back to target.

• On Friday, the British government on Friday announced a set of new legally-binding environmental targets to protect air quality, green spaces and to clean up rivers. "These targets are ambitious and will be challenging to achieve – but they will drive our efforts to restore our natural environment, protect our much-loved landscapes and green spaces and marine environment," environment minister Thérèse Coffey said in a statement first delivered at a U.N. biodiversity conference in Montreal. The announcement said an Environmental Improvement Plan would be published in January setting out in detail how it would meet the new targets.

• Over the week, the main global stock markets were down, particularly Hongkong and Europe. Over the week, all the D-PIMS portfolios were down, particularly the higher risk portfolios. The portfolios were helped by their Absolute Return and Bond holdings.


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Past Performance is no guarantee of, or guide to future returns.

The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.