Stock to watch out as Bank of England hints another interest rate hike

April 05, 2023 12:26 PM BST | By Manu Shankar
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  • The Bank of England has now indicated that it is contemplating another interest rate hike in May.
  • Currently, the interest rates sit at 4.25%.
  • Markets are foreseeing another quarter-point rate increase.

With no signs of inflation abating, the Bank of England has now hinted that it is contemplating another interest rate hike in May. Inflation in Britain unexpectedly rose in February, worsening the cost-of-living crisis. After showing signs of easing out for three months, the UK inflation has now reached 10.4%.

The central bank now feels it may need to increase the interest rate to see the job through in order to control inflation. Huw Pill, BoE's chief economist, termed the UK's inflation situation a manifestation of bad luck. The chief economist said the central bank must ensure that prices were easing before it could stop raising the rates.

Current interest rates sit at 4.25% after being hiked in March. The markets expect that next month, BoE will raise another quarter-point rate on 11 May.

However, Phill is still banking on inflation to fall but warns investors to remain cautious and continue to monitor the inflation prospects because of the potential persistence of domestically generated inflation.

Amid this, let's explore three stocks that investors can watch out for.

Diversified Energy Company plc (LON: DEC)

The Reading-based Diversified Energy Company, as of 5 April, was seen trading at GBX 95.50 at 11:10 AM (BST). The DEC stock was down by 0.05%, holding a market cap of £ 885.92 million. The Diversified Energy Company plc's P/E ratio stood at 1.61 and offered a dividend yield of 15.43%. The stock had given its investors negative returns over the past year and on a YTD basis at -18.9% and -17.78%, respectively.

Shell plc (LON: GLO)

Shell Plc is a global energy giant with operations in Europe, Latin America, the US, and Africa. The market cap of this FTSE-100 constituent stands at £161,750.49 million as of 5 April. The London-based Shell Plc, on Wednesday, was trading at GBX 2,366.50 and was up by 0.32%. The firm offered a dividend yield offering of 3.6% along with a P/E ratio of 5.22. The Shell stock has given its investors positive one-year and YTD returns of 11.81% and 1.67%, respectively.

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.


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