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26 March 2019
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Global equity markets have steadied this week after soft economic data and geopolitics led stocks lower at the back end of last week. The Federal Reserve surprised investors last Wednesday with a dovish announcement that revealed it has scaled back plans for interest rate rises. An initial rally was reversed after the US Treasury yield curve inverted for the first time since 2007, an indicator that is widely associated with an upcoming recession.
The Fed’s more passive, data-led stance on rate hikes saw 10-year yields touch their lowest level in over a year, although yesterday saw a slight rebound.
The ongoing trade war between the US and China and mixed data from Europe added to fears about global economic growth. The Eurozone manufacturing Purchasing Managers’ Index fell to a 71-month low, owing to concerns about Brexit and export demand. In Germany, the Ifo Institute for Economic Research revealed that business confidence has risen unexpectedly in March, but a report from the GfK institute showed consumer confidence moving the other way.
In the UK, parliament has seemingly seized control of Brexit from Prime Minister Theresa May. Three government ministers joined other Conservative rebels in defying the three-line whip, helping to defeat the government in a crucial amendment. The success of the Letwin amendment means that parliament will hold a series of indicative votes, starting tomorrow, that MPs hope will reveal a majority-backed position to negotiate Brexit from.
Sterling is higher today, as is the FTSE 100, but 10-year Gilt yields dipped below 1% earlier, belying a lack of investor confidence. It is thought that the events of the last 24 hours have increased the chances of parliament supporting a softer Brexit and a longer extension, but May has not lost all control and her deal could yet be passed.
Finally, oil prices are rising this week with focus still on US sanctions on Iran and Venezuela and OPEC supply cuts. Last week, prices fell as much as 3.5% as outlook for global demand took a hit.
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Walker Crips
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www.wcgplc.co.uk
[email protected]
This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.
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Important Note
No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
The value of investments can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise. Investors may get back less than invested.
