Category: Market Update
Market Update: Back to the Past
As this week’s title suggests, for some of us it invokes memories of the cold war era of the West vs the USSR in the ‘70s and ‘80s. It is even more remarkable then, that at the time of writing, stock markets have rallied back to roughly where they stood this time last week. The same cannot be said about Russian asset prices, which have roughly halved since last autumn as the chart below illustrates. Perhaps this indicates who markets believe will ultimately pay for Putin’s megalomania.
Special Market Update: Russia Invades Ukraine
Given the devastating news today, we would like to express our utmost concern for the people of Ukraine and of course, our thoughts and wishes are with them. It is our duty as advisers to comment on the economic and financial impact of geopolitical news, but we do so with the utmost respect for the broader context and the devastating impact the current situation is having on people’s lives.
Special Market Update: Putin’s Recognition of Donbas
Russia’s aggression towards Ukraine reached a new level this week after Russia’s president Putin officially recognised the two self-proclaimed separatist ‘republics’ in Ukraine’s Donbas region. Most importantly, he ordered official troops to move in for what he declared to be ‘peacekeeping operations’. This has triggered the West to announce a stepping up of sanctions. Meanwhile Ukraine’s president Volodymyr Zelenskiy said Putin had merely "legalised" troops already present in the republics.
Market Update: Investment Climate Change
Stock markets around the world continued their volatile trading pattern over the past week, although compared with January, trending slightly up rather than down. Bond markets, on the other hand, continued to retreat as yields continued to rise. This type of market action has now become characteristic for capital markets this year, as they experience their very own climate change, now that the coronavirus appears to have lost its lethal impact on the majority of the population.
Market Update: The Lagarde Pivot Hits Insecure Markets
We made the case last month that we disagree with the market maxim that “How January goes, so goes the year”, at least for 2022. After a disappointing January for investors, February made a promising start, only to revert to last month’s wild down and up trading pattern towards the end of the week. This was despite the week not having been dominated by the US Federal Reserve (Fed) or Russian manoeuvres (admittedly Boris Johnson was still big news – but only in the UK).
Market Update: Taper Tantrum 2.0 fears rattle markets
The unnerving start to the year escalated this week, with many lay observers attributing market volatility to the rising possibility of war between Russia and Ukraine. But as outlined in the video market update we posted on Tuesday, while political tensions are not helping markets (nor energy prices), the heart of the market rout lays with the re-emerging determination of central banks to fight inflation through monetary tightening. Markets are concerned central bankers, namely the US Federal Reserve (Fed) have veered from downplaying the inflation threat to overreacting, particularly now, when the economic temperature is coming back down on its...
Market Update: Markets caught between hoping and dreading
The scandals seem to keep coming for Boris Johnson, with several Tory MPs openly calling for his resignation. Betting markets now have the Prime Minister odds-on to resign this year, and discussion is rife about the government’s future. But capital markets took no notice. Indeed, UK assets outperformed on the week, with both the FTSE 100 and the value of sterling finishing higher.
Market Update: January déjà vu
Although 2021 did not close with another ‘Santa rally’, December – and the year as a whole – generated some pleasing returns for diversified investment portfolios. Compared to 2020 (another strong year in performance terms), equity investors fared considerably better than bond investors. Overall, and across asset classes, investors have experienced a notably better pandemic than so many other aspects of society.
Market Update: Christmas tidings of comfort, if not joy
Looking back, the year has exceeded some expectations and underdelivered on others. In terms of our expectations for the economic recovery and capital market performance, 2021 has been better for investors than we dared to hope and forecast at this time last year. On the other hand, I am surely not alone in having hoped the vaccination drives that began one year ago would have ensured further progress in putting the pandemic behind us than where we are now.
Market Update: Plan B or not Plan B? That is the question
Equity markets bounced strongly on Tuesday. The catalyst was a flip in the coronavirus narrative that went: “the new variant is as contagious as the very first, but much less damaging. It confers some immunity. Triple-boosted vaccines work well on it, at the same efficacy as on the other variants. Greater contagion will not overwhelm systems, but will help the world live with the disease.”
Market Update: The pre-Christmas ‘quiz’ that not many want to play
As the end of the investing year draws nearer, markets remain on edge, questioning everything that it thought it knew the answers to only very recently. But this week, central bank and government policy, inflation pressures from supply chain issues, and the latest developments from the virus that refuses to be defeated, threatened to leave investors in a state of puzzlement.
Market Update: New COVID Variant Flattens ‘Black Friday’ Feeling
It’s been a Thanksgiving week of mixed news. The European COVID case surge was surpassed in negative impact by the fears of a new variant emanating from South Africa. US markets hit new highs just before the holiday, but Black Friday has felt a bit dark. In itself, a new variant is not surprising. New variants are always a risk, but each of the past ones has been dealt with by the vaccines.
Market Update: Dollar strength and divergence caps a dull week for investors
Despite the negative news flow, be it COVID or politics, UK consumers are proving their resilience once again with both October retail demand and domestic consumer sentiment pointing up. Perhaps the buoyant jobs market is encouraging the UK public to be less concerned about inflationary pressures eating into their disposable incomes than some economists would expect, or it is equally possible that higher energy and food prices have not quite hit home yet.
Market Update: The bad kind of inflation…
We are in the middle of the biggest inflation bout in years as ubiquitous post lockdown supply issues are sending prices skyward. A recent report from the Bank of International Settlements suggests that this inflation has become self-reinforcing; Bottlenecks have caused suppliers to build buffers at multiple stages of the chain, exacerbating supply problems that drive prices...
Market Update: Confused or determined central bankers?
Capital markets continued over the week to recover just as gradually from the September/early October downdraft as they declined then. Many commentators put it down to the continued strong Q3 corporate earnings announcements, which with 20%-40% year on year growth between Europe and the US has indeed provided a positive for stretched equity valuations.
Market Update: The state of the global economy
By most measures, economic growth has been disappointing over the last few months. Economists started the year with high expectations for the post-pandemic recovery to become a sustained expansion – optimistic that vaccines and rebounding confidence would spur activity.
Market Update: Economy Hits an Air Pocket
October has carried on where September left off, with quite a bit of daily up and down for markets, but with a slight downwards trend. For UK readers, the lack of positive vibe in stock markets is probably unsurprising, with petrol this week only slowly returning to being a commodity – rather than a scarcity...
Market Update: Wall of Worry Time
The UK received worrying economic news on multiple fronts this week, with several utility companies going under and the prospect of steep rises in winter heating costs, petrol stations running out of fuel, gaps on supermarket shelves and the Bank of England signalling it may raise rates as early as December of this year.
Market Update: End of the re-opening honeymoon
We are halfway through September and investors have not experienced a continuation of the positive returns picture of the summer months. This is despite COVID restrictions gradually lifting (not only in the UK) and an on-track economic recovery resulting in record numbers of jobs and demand outstripping supply in many places.
Market Update: Paying For It
Last week, we noted the increasing importance of fiscal policy, and sure enough this week the UK kicked-off the new school year with a big fiscal bang. National Insurance contributions are on the rise, along with a further tax charge on dividends to fund the NHS and social care over the next few years.