Market Snapshot - April 2019

Paul Niven

Managing Director, Portfolio Manager and Head of Portfolio Management, Multi Asset Solutions

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March saw equity markets continue to recover following December’s sharp downturn, with the S&P 500 index reaching pre-November 2018 levels. US economic data continued to be mixed, with recent upside surprises on inventories and existing home sales, while manufacturing was fairly weak. At its latest meeting, the Federal Reserve (Fed) kept US rates on hold, as expected. The Fed also confirmed its dovish stance, lowering its interest-rate projections for 2019 and 2020 and calling for no hikes this year and one next year. This was below consensus expectations. The Fed lowered its growth and headline inflation forecasts, citing a greater-than-expected slowing in growth and less supportive financial conditions, and announced a planned gradual taper in the balance sheet ‘run-off’. US-China trade talks continue, with the outcome looking more positive and a full-blown trade war likely to be averted.

In Europe, growth concerns remain, with manufacturing data looking particularly weak, especially in Germany. Services data, however, is still resilient and unemployment continues to tick down. In the UK, Brexit woes continue. Having returned to the EU to secure further legal assurances after her withdrawal deal failed to pass in the House of Commons the first time, Theresa May brought the deal back to see it rejected a second time. It was then rejected for a third time on the day the UK was due to leave the EU. The EU granted an extensions until 12 April, with the default position being the UK leaves with or without a deal on this day, unless a further extension is sought. MPs voted to take control of the Brexit process from the government, but a series of indicative votes have yet to yield a majority for any option. With more votes planned, the path of Brexit remains uncertain, even as the clock ticks down to the 12 April deadline.

Concerns about Chinese growth have been allayed somewhat, with manufacturing and SME (Small of medium-sized enterprise) sentiment data beating expectations. The Fed’s reinforced dovishness should also continue to benefit emerging markets. Our emerging markets and Japan strategies performed well over the month, as did small-cap stocks.

Despite the recent recovery, valuation metrics in a number of areas are still reasonable. Providing growth is on a positive path globally, 2019 may see better returns than the year just past. Nonetheless, the cycle is mature and the bull market in stocks is extended, with outlooks for global growth in 2019 starting to moderate. We expect that volatility will stay heightened in coming quarters and we continue to invest in a range of diversified underlying stock-selection strategies. We remain well placed to withstand any further short-term volatility in markets.

All information as at March 2019, unless stated otherwise.

The Company is an investment trust and conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s rules relating to non-mainstream investment products and intends to continue to do so.

The company is available for retail investors in the UK, professionally advised private clients and institutional investors who seek growth in capital and income from investment in global markets and who understand and are wiling to accept the risks, and rewards, of exposure to equities.

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Past performance is not a guide to future performance. The value of all stock market investments can go down as well as up and you may not get back the full amount originally invested. If you feel you need specific investment advice that takes your individual circumstances fully into account, please talk to a financial adviser. The value of directly held property will reflect the valuations determined by professional independent valuers. Such valuations are the opinion of valuers at a particular time and are likely to be revised. Property and property-related assets can sometimes be illiquid.