Please find below our Weekly Market Update for the week ending 4th October 2019.
Blue Sky Comment
An interesting week!
On Monday the FTSE 100 opened @ 7426 but by mid-afternoon on Thursday it was at 7036… close to a fall of 400 points and just over 5%. Ouch!
So, what’s been going on?
Essentially poor data from mainland Europe, followed by weak figures from the US has fuelled fears of a global recession, leading to a sudden about turn in the ownership of cash and other so called safe haven assets, like US Treasuries, Gold, the Dollar & the Yen.
– German business activity has weakened and the Eurozone appears to be stagnating
– US services data was weaker than expected
– In the UK, data suggests that there has also been a service sector slowdown, again fuelling fears over a recession in the UK on the back of Brexit uncertainty
There is light however….
In late afternoon yesterday, the FTSE 100 clawed back some of the losses and today the index is over 7,100 points after a positive showing across many US equities.
As we have said before, we need to get used to these sudden sharp shocks at this stage of the economic cycle. A well balanced portfolio is the key. We personally don’t love bonds because globally, many are offering negative yields but holding them is prudent at times like this when there is a flight to safety.
Expect further help from Central banks and hopefully governments in the form of fiscal stimulus.