QuotedData’s Economic round up – June 2018 is a collation of recent insights on markets and economies taken from the comments made by chairmen and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned. Kindly sponsored by Polar Capital
A collation of recent insights on markets and economies taken from the comments made by chairmen and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned.
The noise hides a supportive economic environment. Volatility was once again the principle feature of markets in May. This was largely due to heightened political risk. The Trump administration’s unpopular moves on global trade, North Korea and Iran created high levels of uncertainty in equity markets and a fall in bond yields. Italy’s new populist government also worried investors.
However, the noise is hiding the fact that the global macroeconomic backdrop is relatively benign, with inflation momentarily in check and company results still positive. Therefore, despite the noise, developed equity markets rose in May. Emerging markets delivered negative returns as riskier assets were avoided during the month.
Geo-political risk is but one of the concerns for global investors. Others include inflation and overvaluation.
Fiona McBain, chairman of Scottish Mortgage, makes that point, and writes in the company’s report that undue focus on the headline topics 12 months ago might have led an investor to miss the importance of the extraordinary operational growth which was taking place at a number of the world’s largest companies.David Stewart and Will Wyatt of Caledonia Investments sum up nicely what the other global and flexible investment companies think. Many investors remain mindful of the continuing political and economic uncertainty, despite the strong growth seen across global stock markets. In the UK, the mechanics and implications of Brexit are unresolved, whilst higher inflation and the potential for higher borrowing costs is likely to impact consumer spending. In the US, the Federal Reserve has been increasing interest rates and has begun the process of quantitative tightening. US Treasury yields have risen accordingly, which has historically been a warning for equity investors. The chairman of British Empire Securities Susan Noble commented that volatility returned to equity markets in 2018 after a long period of relative calm and suggests that this may continue.
QuotedData’s Economic round up – June 2018