- Weekly market update
- 2 minute read
- Global equity market performance was primarily positive across the board. In GBP terms, the US rose the most, up +2.19%, followed by Emerging Markets (+0.86%), the UK (+0.79%), Europe (+0.48%). Japan was the laggard, down marginally (-0.07%).
- Bonds were mixed over the week. UK Gilts were down - 0.43%, whilst UK Corporates were up +0.18%. European bonds rose +0.27% and US government bonds fell -0.43%.
- GBP appreciated vs JPY, EUR and USD by +1.43%, +1.20% and +0.22% respectively.
- In USD terms, the oil price rose +4.28% and gold fell by -0.37%.
- Theresa May’s Brexit deal was rejected on Tuesday night by MPs, who voted 432 to 202 against her deal. After surviving the subsequent vote of no confidence, Mrs May is now in a race against time to revamp her deal in order to gain broader support. MPs have tabled an amendment which would force the government to ask for an extension to Article 50. If passed, this would rule out a March “No Deal” Brexit scenario. Markets are pricing this in as constructive for UK assets.
- Global markets received a boost after a rumoured report stated that China may be prepared to make new trade concessions with the US. If the report is true, the concession from China would see the Chinese poultry market opened to the US meat processors, reversing the previous ban. Unsurprisingly, the US’s two largest chicken processors both jumped more than 6.6% whilst trade hopes pushed the dollar higher, however this was short-lived after continued uncertainty over the current government shutdown.
- Eurozone manufacturers’ poor performance in November dampened any hopes of resurgence in regional growth in the final quarter of 2018. Industrial production fell by 1.7% between October and November, the sharpest decline since February 2016. If this trend of declining data continues, it could lead to a more dovish monetary policy in 2019.
- Global growth has weakened somewhat from elevated levels. We expect earnings growth to remain positive but weaker inflationary pressure should cause more gradual interest rate rises.
- Despite elevated geopolitical risk, we believe this is an environment favouring equities over bonds.
- Within our regional equity allocation, we are cautious on UK equities and favour those regions most attractively positioned to benefit from the improvement in the global growth dynamic.
The information contained in this document is believed to be correct but cannot be guaranteed. Past performance is not a reliable indicator of future results. The value of investments and the income from them may fall as well as rise and is not guaranteed. An investor may not get back the original amount invested. Opinions constitute our judgment as at the date shown and are subject to change without notice. This document is not intended as an offer or solicitation to buy or sell securities, nor does it constitute a personal recommendation. Where links to third party websites are provided, Close Brothers Asset Management accepts no responsibility for the content of such websites nor the services, products or items offered through such websites.