Please find below our Weekly Market Update for the week ending 25th January 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
Equity markets in general had broadly posted two weeks of gains at the beginning of 2019, but volatility this week meant many equity indices have posted losses. US markets are on course for their first weekly loss in five but have been boosted towards the end of this week by corporate earnings, suggesting greater confidence in the US economy. There is also yet further speculation that the longest government shutdown in US history may be resolved. There were also reports in the US that the Federal Reserve may be reigning back its strategy of reducing its balance sheet. This had the impact of weakening the dollar which is deemed to be good news for global markets and especially those in the emerging world. All the major markets in Asia responded positively as a result.
Whilst the dollar weakened, Sterling strengthened against both the dollar and the Euro. This week Sterling gas risen against the US Dollar by 1.6% and 1.9% against the Euro. The rise in Sterling has been attributed to a lower perceived risk of a ‘no deal’ Brexit. Next week of course we have the voting for the various amendments to the Brexit plan.
Just a sense check; whilst the news-flow in the UK is pretty awful, it is worth remembering that typically most of our portfolios only have a UK equity exposure of circa 20%. A good exposure if the Brexit plan evolves positively but not enough to decimate portfolios on its own, if talks derail.
Have a good weekend.
Blue Sky investment team