Stock market 'bounceback' a big boost for hard-hit savers

PREDICTIONS are always dangerous but there is a strong case to be made that global stock markets will recover at some point in 2023, giving everybody’s pensions and stocks and shares Isas a much-needed boost.

- Harvey Jones

That would be a rare piece of good news for millions of savers as it will help them recover some of the losses from last year’s global meltdown.

It would come as a huge relief for the growing army of pensioners who put their retirement investments in drawdown in the hope they will continue to grow, only to watch them crash along with shares, bonds, crypto, gold and everything else.

Many have been forced to drawdown extra funds at the worst possible time to pay for rocketing living costs.

The FTSE 100 index of top UK stocks made a strong start to the year, but the road to recovery will inevitably be rocky given all the threats still out there, including the war in Ukraine and China’s Covid nightmare. Optimism is still in short supply but investors are banking on one trigger point in the next few months that will spark a turnaround.

END TO CHEAP MONEY

Forget the war and pandemic, the biggest single reason stock markets fell last year was that the US Federal Reserve, Bank of England and other central bankers started hiking interest rates to combat inflation.

This brought a swift end to the cheap money era and burst a string of bubbles, notably US tech stocks such as Facebook (now Meta) and Tesla, and cryptocurrencies like Bitcoin.

The Fed and BoE are expected to hike rates further but at some point this year inflation will ease and they will “pivot” and start cutting instead.