With thanks to David (DAN) Norman of TCF Investments we would like to share his market overview covering the period April to June 2018.
After concerns in Q1 about the likelihood of a trade war, the markets rebounded in Q2. Data suggests the global economy continues to grow at a steady pace; if anything, this activity accelerated in Q2.
In the USA confidence in the economy increased which caused the Fed to signal the likelihood of further interest rate increases. They signalled the rate could rise to 3% by early 2019. The unemployment rate reached an 18 year low of 3.8%, reinforcing wage growth and spending.
The UK has seen rising disposable incomes, but the pace of economic expansion lags other advanced economies. The Brexit negotiations have made little progress and are probably unlikely to do so until the March deadline gets within sight.
Market volatility and increasing interest rates are perhaps the biggest issues moving forward
Concerns about a potential trade war between the USA and China impacted on the value of equities in 1Q 2018. However, in 2Q, the value of equities rebounded strongly. The FT All Share rose by 9.2% over the quarter, which was the best quarterly performance in over 3 years. The USA equities market also performed strongly. The main area of poor equity performance was Emerging Markets, which saw a negative return of -2.4%.
Compared to Equities bonds did not perform so well in 2Q. Gilts rose by 0.2% in Q2; whilst both indexed linked and corporate bonds produced small negative returns of -1.0% and -0.4% respectively.
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.