BATS, GLEN, BP.: Stocks to watch as BoE predicts inflation-related woes

HIghlights

• Bank of England Governor Andrew Bailey has said that inflation could bring unseen challenges for the UK during the current energy crisis.
• Bailey believed that if needed, the policymakers should step up acting more forcefully to control the consequences.

With inflation soaring in Britain, the Bank of England (BoE) Governor Andrew Bailey said that the UK economy could see tougher days during the current energy crisis as compared to other countries. He added that if needed, the policymakers should act more forcefully to reign the inflation. 

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The BoE Governor said that the high energy price shock, the Covid pandemic, and staff shortages could further weaken the UK’s economy. Speaking at a European Central Bank (ECB) event in Portugal, Bailey said if the situation worsens, the Central Bank will step in and take more steps.

Having said that, the BoE has raised rates five times since December to bring inflation down from 0.1% to 1.25%. It has also warned inflation might hit 11% in the next few months.

Experts are expecting an 80% chance of a further rise in interest rates by 50 bps at its scheduled meeting in August. On Thursday, Strathclyde University’s Fraser of Allander Institute cut down its forecast for economic growth in 2023 from 1.5% to 0.5% as sharply rising inflation is taking a toll on households and businesses. Its latest quarterly report also highlighted the shift in customers spending behaviour in response to the ongoing crisis.

Let us look at 3 recession-proof stocks that you may consider as inflation will be higher and persist for longer than previously forecast.

British American Tobacco Plc (LON: BATS) 

The FTSE 100-listed multinational tobacco manufacturing company’s market cap stood at £81,900.72 million as of 30 June. On a year-to-date basis, British American Tobacco has offered its shareholders a return of 28.99% as of 30 June. The company has given an annual dividend yield of 6.0% as of 30 June and boasted a P/E ratio of 12.54. The tobacco company’s shares deteriorated by 2.72% at 8:25 AM (GMT+1), standing at GBX 3,528.00.

Glencore Plc (LON: GLEN) 

Glencore Plc is one of the largest natural resource companies with a global presence. It is engaged in the production of silver, copper, zinc, nickel, aluminium, ferroalloys, and iron ore. On a YTD basis, the natural resource company has offered its shareholders a return of 20.06% as of 30 June. The FTSE 100 listed company has given an annual dividend yield of 4.2% as of 30 June and is offering its investors a P/E ratio of 14.96. Glencore Plc’s market cap stood at £60,370.48 million as of Thursday, while its shares were witnessing a deterioration by 2.30% at 8:23 AM (GMT+1), standing at GBX 449.65.

BP Plc (LON: BP.) 

One of the leading British oil and gas companies, BP Plc, has operations across Asia, Europe, Australasia, Africa, and North and South America. On a year-to-date basis, the global energy company has offered its shareholders a return of 18.00% as of 30 June. The company has given its investors an annual dividend yield of 4.2% as of 30 June. BP Plc’s market cap stands at £76,326.58 million as of 30 June 2022, while its shares deteriorated by 2.01% at 8:20 AM (GMT+1), standing at GBX 389.70.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.