Market report: Gains for gold, high UK rents and Berkshire Hathaway’s future
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Hopes for a softer landing for the mighty US economy are failing to lift overall sentiment in Europe, as investors focus on the risks of sticky inflation. Comments from a usually hawkish Fed policymaker that there could be room for cuts to interest rates if the price spiral keeps heading in the right direction look set to push Wall Street higher at the open. But the FTSE 100 has opened on the backfoot with little to spark a wave of buying. Central bank policymakers in Europe have been more guarded, with Christine Lagarde of the ECB stressing that wage pressures remain elevated, and Andrew Bailey of the Bank of England warning that higher rates will be needed for a prolonged period.
Gold continues to shine
Gold has continued its upwards ascent, helped by the dip in the dollar as interest rate cuts are eyed on the horizon. A cheaper greenback makes gold less expensive to buy for foreign investors. The eruption of conflict in the Israel and Gaza sparked this most recent rally. Although there are hopes a truce can be extended, there is deep uncertainty about what might lie ahead for the region, which is making gold edge higher.
Oil prices stabilise
As speculation continues to swirl about the outcome of the looming OPEC+ meeting, Brent crude has stabilised around $81 a barrel. Saudi Arabia is attempting to win support for a reduction in quotas to help put a floor under prices, but it’s still unclear how many producers are on side. The oil cartel’s meeting has already been postponed once, and if a decision is delayed again, there may be a shift downwards in prices. For now, concerns about disruption to supplies caused by a storm in the Black Sea have kept crude slightly higher.
High rents cause downsizing
With mortgage costs set to stay high, it’ll pile yet more pressure on landlords with hefty borrowing burdens, pushing up rents. Already tenants are facing eyewatering rises in their monthly bills, forcing more families to downsize to smaller homes. According to Dataloft, renters over 30 are more likely to have to move out of popular towns and cities to cheaper areas. The rental crunch is putting the hopes and dreams of eventually owning a home even further out of reach, as it’s making saving for a deposit even harder.
End of an era at Berkshire Hathaway
The death of Charlie Munger, Warren Buffett’s right-hand man, is fuelling speculation about succession at the investment giant. The dynamic duo turned Berkshire into a powerhouse, with Munger widely credit for helping steer the ship into more profitable waters by refocusing on companies which weren’t just cheap but offered longer term value. Plans are already in place with vice chairs Greg Abel and Ajit Jain overseeing Berkshire’s non-insurance and insurance businesses. The unique relationship between Munger and Buffet, which lasted for six decades, won’t be replicated. However, the principles established are set to cascade down through the company for many years to come.”