By admin 
What’s going on here?
The UK economy shrank slightly for a second month in October – the country’s first back-to-back fall since the early days of the pandemic.
What does this mean?
Economists expected the British economy to grow, albeit slightly, by 0.1% in the latest month. But that wasn’t to be: factory output proved exceptionally weak, falling by 0.6% – despite predictions of a 0.3% rise. Even the usually upbeat services industry was lackluster, flatlining from the month before. Clearly, trouble is brewing for the British economy. It’s only managed to grow in one of the past five months – and if things don’t start to perk up, there’s a very real chance that this could be the start of a recession.
Why should I care?
For markets: Stiff upper lip, indeed.
The news isn’t all bad: UK stocks are looking cheap. They’re trading at very low valuations because the country’s economic and political challenges have had investors turning up their noses. And while some of London’s better-looking opportunities have been snapped up by glossier rivals, with takeovers doubling this year to about $60 billion, there are still some small, well-priced jewels in Great Britain’s stock index crown. That must be why the blue-chip FTSE 100 just saw its first monthly inflow in five years.
The bigger picture: Location, location, location.
Fund flows are a major driver for share prices, and US stocks get the most. Makes sense: the country has the world’s buzziest companies. But there’s a side effect to all that glory: the money coming into the S&P 500 index lifts the prices of all its stocks – not just the “magnificent” ones. Meanwhile, valuations for similar firms in other countries tend to be cheaper. It’s no surprise, then, that firms have pulled up stakes from the UK and elsewhere to relist in the US, where investors are willing to pay more.