Please find below our Weekly Market Update for the week ending 8th February 2019.
The intention is to provide a brief insight into the latest dynamics and inform you of any changes occurring within the model portfolios.
Blue Sky Comment
Softening
It appeared that the trade wars between The US and China were softening last week… at least for the time being and equity markets liked this.
Also, the Federal Reserve softened their stance on raising interest rates. The Fed’s Chair, Jerome Powell, pointed out that this wasn’t a reaction to financial markets but instead due to muted inflation, and is ‘solid’ rather than strong growth. The chances of the Fed being overly aggressive has much reduced… and equity markets also liked this.
Last week, Theresa May had her new plan endorsed by the House of Commons, in contrast with the Commons’ 230-vote margin rejection of her deal earlier in January. May has now headed back to Brussels to renegotiate her Brexit deal, less than two months before Britain’s scheduled March 29 exit. Again, equity markets liked this but are of course very guarded about the possibility of a ‘no deal’.
As LGT Vestra reported this week:
With the expectation of a fall in the value of the US dollar, Emerging Markets are also a likely beneficiary. Lower levels of growth, but correspondingly less concern around the Federal Reserve tightening the global economy into recession, is just the environment that equity investors have been hoping for.
We said the equity markets were oversold!
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Kind regards
The Blue Sky Investment Team
