Market Views February 2019
In this our latest market views for February 2019, our Investment Director, Michael Carden considers the current markets and outlook.
Some optimism has returned in January…
Particularly to the important US Stock Markets, this follows a punishing and at times volatile December.
The US S&P 500 was up by 7.8%, its best performance in January since 1987.
The Dow Jones was up by 7.2% in January, its largest one-month rise since 2015.
There are signs that the US China trade war may behind-the-scenes be imposing pressure on both sides to reach an agreement. This is despite the ongoing bellicose Twittersphere commentary by President Trump,
US consumers are likely to suffer financially from an ongoing trade war if prices of their Chinese -sourced consumer goods rise. Apple’s share price has also been a casualty, partly as a result of much reduced iPhone sales in China.
Growth in China has slowed
This is partly due to the impact of the trade dispute but also as the government has tried to rein back previous economic stimulus.
Both nations, as the top two global economies, are important to the health of the global economy. So there is pressure to resolve the differences even if only temporarily. As China continues to grow and become more sophisticated the same issues will re-emerge as both nations strive for economic and political influence.
Here in the UK
Other than the recent snow headlines the Brexit saga continues to dominate with a very short timeframe before the UK is due to leave the EU.
The pressure on politicians is rising. It is still possible that Theresa Mays original agreement, heavily defeated initially, may yet pass. This is with some kind of face-saving amended treatment of the Irish backstop border issue which Parliament has asked the PM to obtain from the EU.
To do so this calls for further goodwill from the EU in softening their position. All have their own other issues to deal with. In particular, forthcoming elections in May to the European Parliament throughout the EU. This may result in more Euroscepticism throughout the EU nations once the dust of the election has settled.
Global economic growth has remained positive.
Interest rates have remained flat and very low in the UK, Eurozone, and Japan. All are all likely to remain so in order to maintain this growth.
In the US it seems that the further interest rates may now be reduced in number or not happen at all. The chairman of the US Fed, Jerome Powell, has considerably softened his rhetoric on the subject of increasing interest rates.
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Important Risk Warnings:
This article and the information on this website is not personal advice. It’s only intended to give you a brief summary or highlight a particular issue for you to investigate further. It is based on our current understanding of legislation and HMRC guidance which can change. Correct as at February 2019. If you’re in any doubt whether a particular course of action is suitable for your circumstances, you should seek professional advice. Tax rules can change and any benefits depend on individual circumstances.
The value of investments and any income from them can fall as well as rise, so you could get back less that you put in. Past performance is not a guide to the future. It cannot provide a guarantee of the future returns of a fund.