A brief insight into the latest market dynamics and details of any changes occurring within our model portfolios.
A number of announcements were made this week from Mark Carney, governor of the Bank of England. These came on the back of the Bank voting to hold interest rates at 0.25%. Uncertainty over the economy as a result of Brexit has cut its annual growth forecasts to 1.7% from the 1.9% announced in May. Inflation currently stands at 2.6% with wage increases lower at 2%. As a result, sterling dropped to a nine month low against the euro.
In the US, six months of good company results have driven the Dow Jones over the 22,000 mark for the first time. The Dollar, however, still languishes at 15 month lows. US jobs figures due out shortly will give an indication of the likelihood of the Federal Reserve raising interest rates again this year.
In Europe, good news again continues to drive markets higher. Retail sales for the euro zone in June showed gains of 0.5%, well above forecasted 0.1% increases.
Gary’s market comments in conjunction with our investment partners
Elections will once again dominate headlines as Germany goes to the polls to elect a new Bundestag on 24th September.
Angela Merkel’s Christian Democratic Union (CDU), is likely to remain as the largest party with a predicted 40% share of the vote. The choice of coalition partners is going to prove decisive, but LGT Vestra hold the view that a win for Merkel is likely to have a positive impact upon markets.
Unemployment levels in the eurozone continued to fall in June (9.1%). Germany was the lowest of all at just 3.8%.
In the US, the Federal Reserve kept interest rates unchanged at its 26th July meeting, but signalled that it is looking to ‘unwind its balance sheet’ shortly. The Fed’s chair, Janet Yellen has been preparing for the reversal of its quantitative easing programme, so that it avoids creating turmoil in the markets.
Sources: LGT Vestra and 7IM