Caught napping?

What a rally this has been, a rally that has caught out many investment houses. The about-turn in markets has stung large asset managers and other institutional investors. Those with large cash holdings have also missed out, certainly in the short-term, as the stellar investment opportunities have passed by. Time is one’s friend if investing for the medium/long-term when volatility occurs, but not when there are opportunities!

Over the last week, markets have been boosted by the 90-day extension to US and China trade talks, in the hope they can hammer out a better deal for both countries. On Monday alone, Apple’s shares, for example, rose by 6.31% and Amazon’s by 8.07%.

China has announced another substantial monetary easing package designed to improve liquidity, strengthen expectations and improve sentiment.

Trump has once again had a go at the Fed Chair, Jerome Powell, on the back of lower-than-expected inflation figures, yet again calling him “too late Powell”. It remains to be seen whether inflation can be resilient in the face of tariffs.

UK growth is looking more encouraging, and next week the UK Chancellor, Rachel Reeves, is seeking to glean a better trade deal with the US. If she pulls it off, the belief is that there would be a limited need for further tax rises in the Autumn Budget, which would be very welcome!

This week’s content: 

• US-China 90-day pause
• Markets react positively
• Trump lays into Powell again on the back of good news
• Still a chance of a US recession
• More stimulus for China
• Good news for the UK economy
• A new trade deal would limit tax rises
• A fear of missing out replaces fear
• Institutions miss out on the rally
• Summary

US-China 90-day pause

On Monday, the US and China agreed to have an impasse for 90 days whilst they attempt to come up with hybrid tariffs which will be acceptable to both countries.

As part of the 90-day agreement, both countries will reduce their reciprocal tariffs from 125% to 10%, although nuances mean the levies will inevitably be higher. However, there is hope that tariff agreements will be negotiated at a level which is more palatable for all.

Markets react positively

It’s been a welcome respite from all the negativity bombarding us at the moment, as equity markets continued their recovery. I’ve heard comments that markets are back to where they were before the drop, but many sectors still have a way to go to recover their previous lofty valuations, although recent price movements have been very encouraging.

US stocks have risen to a two-month high and, amidst the dynamism, many are forecasting much-improved targets for the likes of the S&P 500.

Continues…

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Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.