Investment Market Overview 1Q (Jan-Mar) 2019

With thanks to David (DAN) Norman of TCF Investments, we would like to share his market overview covering the period January to March 2019.

Markets Outlook

You may recall our Q4 2018 article detailed a very negative quarter for investors. The declines in the last quarter of 2018 largely wiped out all of the previous gains in the year. Happily, Q1 2019 showed an encouraging reversal on Q4 2018 with gains in both equity (shares) and bond markets.

In 4Q 2018 there was an increase in the trade conflict between China and the USA. The situation has improved with trade talks now progressing (although slowly) and this has had a positive impact on markets. In the USA The Federal Reserve recent comments on interest rates led analysts to predict USA interest rate rises in 2019 are unlikely. This has been one of the major factors behind the strength of markets in 1Q 2019.

USA quarterly GDP growth continued to slow during 1Q but the USA economy remains resilient. In contrast, the Eurozone continues to be challenged by economic and some political risks. In Germany, car factory orders have plummeted and the economy is close to recession. The Italian economy fell into recession for the first time since 2013 and of course in the UK the Brexit situation rumbles on. In reaction to the threat of recession, the European Central Bank has indicated interest rates will remain fixed through 2019.

Equities

In the UK, the FT All Share rose by 9.4% in the quarter compared to a fall of 10.2% in 4Q.  In Sterling terms, the USA S&P 500 market was up 11.1% in Q1, whilst in Japan, the Topix was up 4.4%.  Despite the issues in Europe (see above) was up 8.1% (ex U.K) in the quarter. Emerging markets were up by 7.9%.

Bonds

Gilts (a bond issued by HM Government) returned 3.4% growth in Q1. Meanwhile, Corporate bonds were up 4.8%. Bond markets have probably delivered the bulk of their expected returns for 2019 already.

With growth slowing, ongoing Brexit concerns and problems in European economies, volatility in 2019 is likely to be high. We hope this short update is useful. Should you wish to discuss the potential impact on your investment portfolio then please do not hesitate to get in touch on 0800 043 8341 and we will be happy to discuss.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance. This blog is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action. Tax regulations can change and any figures quoted above are at the date of publication.