Deal or no deal?

  • Weekly update
  • 2 minute read


  • Global equity market performance was positive across the board. In GBP terms, the US led the way, up +5.66%, followed by Emerging Markets (+2.71%), then Japan (+2.04%), Europe (+1.54%) and the UK (+0.29%).
  • Bonds were mixed over the week. UK Gilts and corporate bonds fell -1.00% and -0.60% respectively. In local terms, European government bonds rose +0.56% and US government bonds rose +0.16%.
  • GBP depreciated vs USD and EUR by -0.51% and -0.34%. GBP appreciated marginally +0.04% against JPY.
  • In USD terms, the oil price rose +1.01% and gold fell by -0.50%.


  • The UK’s “Brexit department” (The Department for Exiting the European Union) produced a long-term economic analysis of the UK’s long-term GDP prospects. The report estimated that Theresa May’s deal could result in UK GDP being c.4% worse off in 15 years’ time; the document also modeled a “no-deal” scenario which suggested that GDP could be 9% lower. Shorter term, all eyes are focused on May’s progress towards securing support for the withdrawal agreement on the 11th December.
  • The leaders of the US, Canada and Mexico have formally signed a trade agreement, replacing NAFTA. The deal covers $1tn of commercial exchanges across the continent. Whilst the signing provides a modest boost to trade stability, the significance is at yet gestural, given that there is still much required to ratify the deal. Trump will hope his withdrawal from NAFTA will pressure Congress into approving these new arrangements, though the House Democrats hold the key to whether the deal is passed.
  • The official Chinese manufacturing PMIs snapped a two year growth streak after the index fell to 50 in November, marking the first time the sector failed to expand since July 2016. With many analysts expecting conditions to worsen in 2019 as the effects of front-loading Chinese exports wash through and the additional tariffs come into play. Manufacturing data may recover if the détente agreed this weekend at the G20 in Argentina translates into meaningful measures.

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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