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Energy and security stocks for the new era

Shares taking momentum into a new monetary policy regime
Energy and security stocks for the new era

 

  • US Fed signals more aggressive stance against inflation
  • Bank of England hikes base rate to 0.75 per cent
  • Energy security remains a prime concern

Federal Reserve Chair, Jerome Powell, has finally signalled the US central bank’s intent to take an aggressive line against inflation, although may have to get realistic about the prospects the actions will slow growth and have implications for employment figures.  The companies that investors are keen on according to our momentum screen shows what the market expects given a new Fed policy regime and a very different geo-political back-drop.

The Fed increased its target base interest rate to between 0.25 an 0.5 per cent, but importantly the so-called dot plot of where Federal Open Market Committee (FOMC) members expect rates to head, suggests a the target interest rate could be almost 2 per cent by the end of the year. That decision was followed by the Bank of England raising the UK base rate to 0.75 per cent. As inflation continues to bite, policy makers both sides of the Atlantic have had their hands forced. Many analysts were already expecting a hawkish turn and our earnings upgrade momentum screen reflects the companies the market is most optimistic about both in a tighter monetary policy regime and with ongoing uncertainty over Russia's war against Ukraine. 

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