Recognisable Structures in Wolverhampton

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The Expert View: M&S, Thomas Cook and British Land

22/05/2018 05:00:00

Our daily roundup of analyst commentary on shares, also including BGEO and Allergy Therapeutics.

Tuesday Papers: Sainsbury’s tie-up under new scrutiny

22/05/2018 04:49:00

And Barclays has been cleared of criminal charges related to £12 billion Qatari crisis funding.

Overnight Markets: Dow climbs nearly 300 points on trade war truce

22/05/2018 01:00:00

Industrial companies and banks made some of the biggest gains, while technology stocks also rose.

Patience pays off for fund managers as Ocado rockets

21/05/2018 15:56:00

Fund managers who stuck with Ocado through the lean times have been vindicated, with the shares up 250% in six months.

Profits boom helps global dividends break record

21/05/2018 12:53:00

Global dividends have hit the highest ever level for the first three months of the year, but the dollar's rally since could begin to bite.

Oil and dollar rally a perfect storm for emerging markets

21/05/2018 11:23:00

Emerging markets have suffered as the oil price and the dollar have risen, but not all are affected equally.

FTSE hits fresh all-time high as trade war put 'on hold'

21/05/2018 10:16:00

US Treasury secretary Steven Mnuchin says trade war with China has been placed 'on hold', sparking FTSE 100 rally to fresh all-time high.

6 shares the pros are buying and selling

21/05/2018 05:00:00

Our regular roundup of trades by professional investors, featuring Moss Bros, Celtic, Byotrol, Numis, Arrow Global and Hostelworld.

Monthly Market Outlook March 2018/April 2018

Monthly Market Outlook Article

While markets have recovered a touch from their lows, a variety of trade and geopolitical factors are likely to keep volatility raised for the weeks and months to come. Meanwhile, the economic backdrop remains broadly positive and as a result, we remain constructive on equity markets for the remainder of 2018.

Trump's proposed tariffs on steel and aluminium came into effect in March. However, the protectionist measure was scaled back as a number of countries were excluded and the President's sights narrowed towards China. Further tariffs on $50bn of Chinese goods were announced in defence of US intellectual property. In response, China announced a 25% tariff on a wide range of goods, including automobiles, airplanes and the top US agricultural export to China, soybeans. These tit-for-tat tariffs have increased fears of a trade war between the superpowers. How this will progress is unknown, but a global trade war is in no one's interest so pressure will be on all parties to resolve their differences.

Following the poisoning of a former Russian spy in the UK, allegedly by the Kremlin, the UK, the US and many others have expelled Russian diplomats. The Russian government has responded in turn and now the US has imposed sanctions on various Russian oligarchs and government officials. Tensions between the two countries further escalated following the recent chemical attack by the Syrian regime on its own people. The US supports the rebels whereas the Russian regime stands behind President Assad. Trump has said there will be US military action on Syria if they are found to be responsible, which is strongly opposed by Russia. We continue to monitor these events closely but expect that the situation will be contained within the region. Whilst it is difficult to predict how the situation will progress given US policy seems to turn on a tweet, it does back up our belief that volatility will be heightened for some time to come.

Beyond these geopolitical factors, the global economy remains fairly robust. In the US, economic data is still solid. The labour market is looking strong, small business optimism is near its highest in 35 years and inflation is picking up. Current survey data is also indicative of annualised GDP growth of 5%. Given this environment, the Federal Reserve (Fed) hiked rates in March, as was widely expected by markets. They also increased median rate expectations for 2019 and 2020 to 2.875% and 3.375% respectively. US tech stocks, in particular, have seen some difficulty in recent weeks, driven by the discovery of a significant breach of user data at Facebook and Trump's repeated criticisms of Amazon.

In the UK, the Bank of England (BoE) meeting brought no change but saw two members dissenting and voting for a rate hike. However, all agreed that any tightening would be "at a gradual pace and to a limited extent." The latest inflation data saw CPI inflation fall back from 3% to 2.7% due to the falling out of the post-referendum currency effect. Uncertainty regarding Brexit and by extension, the unpredictability of currency moves, remain the principal concern in the UK market. Although with a price to earnings ratio of 13x and a dividend yield of 4.3% on the FTSE All-Share index, a lot of bad news appears to be priced in.

The European economy has been expanding well and the European Central Bank (ECB) voted unanimously at their March meeting to remove the language indicating that bond purchases could increase by size or duration, given the more stable growth outlook and falling unemployment. Surprisingly, the political environment has not seemed to unnerve European investors despite the Italians struggling to form a government and Macron finding difficulty in pushing through his reform agenda.

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News & Blog

Monthly Market Outlook - March 2018/April 2018

While markets have recovered a touch from their lows, a variety of trade and geopolitical factors are likely to keep volatility raised for the...Read More

Spring Statement 2018

We have created a PIA summary and commentary following the Spring Statement from Philip Hammond....Read More