Deal dilemma

  • Weekly update
  • 2 minute read


  • Global equity market performance was broadly negative. In GBP terms, Japan provided some relief, up +0.27%, followed by the UK down -0.69%, Emerging Markets (-1.15%), Europe (-1.53%) and the US was the laggard (-3.75%).
  • Bonds were mixed over the week. UK Gilts and corporate bonds returned +0.32% and -0.03% respectively. In local terms, European government bonds rose +0.32% and US government bonds rose +0.18%.
  • GBP depreciated vs USD and JPY by -0.16% and -0.04%. GBP appreciated +0.60% against EUR.
  • In USD terms, the oil price plunged -10.70% and gold rose by +0.10%.


  • The terms for UK’s exit from the EU have been officially signed off by EU leaders, following months of negotiations over Brexit. The deal aims to smooth the divorce process, although many details of the future relationship are yet to be agreed. Mrs May will seek parliamentary approval, knowing a rejection of this deal will cause talks to go “back to square one”. With markets keen to avoid any further uncertainty, Sterling became the beneficiary after the news broke of an agreement, appreciating vs the Euro, whilst UK stocks reacted mutedly.
  • The Eurozone economy suffered a setback, as the composite PMI fell from 53.1 to 52.4 in November, the lowest since December 2014. The survey showed that activity growth had waned in response to slower order book growth and falling exports, all of which were accompanied by elevated price pressures. The ECB is set to end its QE program in December, but if weak data persists the central bank may delay tightening monetary policy.
  • Tensions appear to be rising ahead of President Trump’s G20 meeting with Chinese President Xi Jinping. This comes after US trade representative, Robert Lighthizer, released a statement accusing China of failing to alter its “unreasonable” market-distorting trade practices. Chinese officials responded by dismissing the report. Heightened tensions between the two countries will continue to weigh on global stocks until a resolution is found.

Our view

  • Global growth remains resilient although there is evidence of the recovery being less synchronised. We expect earnings growth to remain positive and inflation to cause 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.


Important information
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.


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