A brief insight into the latest market dynamics and details of any changes occurring within our model portfolios.
Market data
Slower UK growth
The UK’s economy grew at its slowest annual rate since 2013 in Q2 2017 according to revised numbers from the Office for National Statistics (ONS).
Gross Domestic Product (GDP) grew by 1.5% year-on-year, down from the earlier 1.7% estimate. The services sector which represents 79% of UK output, contracted by 0.2% month-on-month in July from 0.5% in June. The year-on-year figure was also lower.
Is there a rate rise on the immediate horizon?
The Bank of England’s Governor, Mark Carney, confirmed that the central bank may raise interest base rates on 2 November. Speaking ahead of the ONS GDP data release, he did however state that as far as the Bank was concerned “all indications are that if it [the economy] is [on track], in the relatively near term we can expect that interest rates will increase”. However, while providing the clearest guidance yet on the chance of rates rising, Carney also stated that any rate rises “will be to a limited extent and gradual” given the concerns about consumer lending in the UK.
Strong Eurozone economic confidence
The European Commission’s Economic Sentiment Indicator continued its recent upwards trend, rising to 113 in September, up from 111.9 in August. This was the strongest reading since June 2007. At a national level, the Netherlands (+1.9) and Italy (+1.8) saw the largest rises, followed by Spain (+0.6), Germany (+0.5) and France (+0.4). Confidence was up across sectors too: industry confidence (+1.6); services confidence (+0.2); consumer confidence (+0.3); retail trade confidence (+1.4); and construction confidence (+1.6) were up. The only confidence number down was in financial services’ confidence (-6.8).
Corporate tax changes
Donald Trump announced plans for US corporate tax reform, which included proposals to lower the corporate tax rate from 35% to 20% and a move to a ‘territorial’ system in which US companies would mainly pay tax on US earnings only. Energy stocks are expected to be among the main beneficiaries of the proposals since they pay some of the highest marginal rates of tax in the US. Conversely, IT companies would be among those that benefit the least since they are already among those that pay the least tax.
Gary’s market comments in conjunction with our investment partners

There have been no major changes to the portfolios.
Next week we will provide a quarterly market overview for LGT Vestra.

7IM completed its formal quarterly review of its investment positions and made a number of changes to its equity investments as a result:
- They increased their European equity investments
- There was also a decision to increase holdings in Japanese equity, adding to the increase in June
- A reduction was made to their Emerging market across our portfolios
- Frontier Market exposure was increased in their Balanced strategy and increased holdings in Moderately Adventurous and Adventurous strategies
Next week we will provide a quarterly market overview for 7IM.
Sources: LGT Vestra and 7IM