Mazars Wealth Management Investment Newsletter October 2018
Mazars UK Trusted AdvisersEconomics-Monthly Market Update
Mazars Wealth Management Investment Newsletter October 2018
Mazars Wealth Management Investment Newsletter October 2018
Tue 23 Oct 2018
Read our full MWM Newsletter October 2018
The global economy continued to grow in the third quarter of 2018 despite a backdrop of concerns over the continued imposition of trade tariffs primarily by the United States. It is apparent that any optimism a compromise between the US and its trading partners (China in particular) can be arrived at quickly has started to dissipate.
A further concern for trade and growth is the disruption caused by the Brexit process, although recent export orders figures do show some sign of resilience in the demand for UK goods abroad, despite the uncertainty. Mrs May’s ‘Chequers plan’ pleased neither EU leaders nor the eurosceptics within her own party, and we see no reason to alter our view that this brinkmanship will continue to the eleventh hour, with the final outcome being not final at all and the process being further drawn out. Europe itself has its own issues, not least in Italy where the coalition government is struggling to present a budget which satisfies markets of its creditworthiness.
These disruptive forces to the status quo played out in markets during Q3, with the headline global equity market return of c.6.6% (in Sterling terms) masking significant divergence between geographies. The US led the way with returns of 9.4% as the effect of tax cuts trickled through into the economy and the Dollar continued to strengthen. By contrast the strong Dollar kept returns from Emerging Markets muted as problems in Argentina and Turkey weighed on the index. Elsewhere, Europe and the UK significantly underperformed, with the latter ending the quarter in negative territory.
Our Investment Committee agreed to maintain our cautious stance reflected by our neutral position in equities. Geographically we added to UK smaller companies to protect against the possibility of a surprise favourable outcome to the Brexit negotiations, as well as adding to the US. We remain underweight in bonds as we are wary of late cycle inflationary pressures building in labour and commodity markets which may lead to faster monetary policy tightening than is currently expected.
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Weekly Market Update: Vaccine and Stimulus Sentiment Help Equities to Set New Highs
With the exceptions of the UK and Japan, equity markets were positive last week. Technology stocks performed particularly well in the US where Netflix was boosted by a larger than expected subscriber gain during the pandemic. US equities, up +1.4%, were supported by political tailwinds, with substantial stimulus expected under the new Biden administration. UK equities fell -0.6% due partly to Sterling strength, as a large portion of the index’s earnings are overseas, and Oil weakness. Globally, Telecoms and IT led whilst Financials and Energy lagged. Emerging Market equities continued their strong start to the year up +2.0% to a +7.7% rise year-to-date. The US 10Y was largely unchanged, the yield up 0.2bps to 1.086%. The UK 10Y rose +2.0bps to 0.31% on positive vaccine news and improved sentiment about the economic outlook in UK PMI data. Gold rose +0.9% on the week whilst Oil fell -0.7% to US $52.7.
Weekly Market Update: Global Equities Slide as Volatility and Covid-19 Cases Rise
Global equity markets were down last week amid delayed growth recovery expectations. US equities fell -3.5% in Sterling terms, with volume skyrocketing mid-week to a record high of 23 billion share transactions as market attention centred on retail investors purchasing highly shorted stocks. UK equities fell -4.3% due, in part, to Energy underperforming other sectors. European equities fell -3.5% amid fear of a slowdown due to the pandemic, and delays in the distributions of vaccines. Emerging Market equities fared worst, down -4.7%, bucking a trend of strong performance since the start of the year. Globally, all sectors were down with the Energy sector performing the worst. Sterling strengthened up +0.2% and +0.4% against the US Dollar and Euro respectively. The US 10Y was down 2bps to 1.07%, while the UK 10Y rose 1.9bps to 0.33%. Gold fell -0.6% on the week whilst Oil fell -0.3%.
Weekly Market Update: Improving Economic Outlook and Falling Volatility Support Equity Markets
Global equities rebounded from their sharp sell-off last week, rising +4.0% in Sterling terms. US equities were some of the best performing, rising +4.5% and more than recovering the previous week’s losses in spite of weaker than anticipated labour market data. UK equities rose +1.3%, the worst performing major region. Energy particularly struggled, in spite of rising oil prices, as UK energy giants BP posted its first annual loss in a decade, while Royal Dutch Shell profits fell 71%. European equities rose +2.8%. Emerging Market equities fared best, up +4.8%, reverting back to their trend of equity leadership in 2021. Globally, all sectors were positive with the Technology sector the strongest. Sterling rose +0.2% and +1.0% against the US Dollar and Euro respectively, continuing its strengthening trend this year. The US 10Y yield rose 9.8bps to 1.16%, while the UK 10Y rose 15.5bps to 0.38%. Gold fell -2.0% on the week, while Oil rose +8.7%.
Weekly Market Update: Markets Rally for Second Week as Inflation Expectations Return
Global equities continued last week’s gains, rising +0.7% in Sterling terms. UK equities, amongst the top performing major markets, rose by +1.6%. They were supported by rising oil prices and positive returns from energy companies, as the domestic market is overweight to the Energy sector. European equities, amid high volatility, were up +0.8%, due to improved coronavirus infection rates and hopes of a large U.S. economic stimulus. US equities rose +0.4%, the worst performing major region. Globally, Energy was the best performing sector whilst Utilities and Cons. Discretionary were the only sectors to finish the week down. Emerging Markets maintained their strong performance since the start of the year, posting gains of +1.5%. Sterling rose +0.8% and +0.3% against the US Dollar and Euro respectively, continuing its strengthening trend this year. The US 10Y yield rose 4.5bps to 1.2% and the UK 10Y rose 3.5bps to 0.52%. Gold fell -2.0% on the week, while Oil rose +3.7%.
Weekly Market Update: Bonds Sell Off Spills Over to Wider Market
A significant rise in US Treasury yields unsettled markets last week. US equities fell -1.9% in Sterling terms, with Tech stocks suffering their worst week in nearly six months. UK equities fell -1.9%, with Energy and Financials the only two positive sectors for the week. Emerging Markets suffered the greatest sell-off, having led global equity markets so far this year. UK and Emerging Markets are the only major equity markets still positive for the year in Sterling terms. Globally the only positive sector was Energy which was supported by rising oil prices. Investors will keep a keen eye on the OPEC+ meeting this week for any indication of increased oil supply. Japanese equities fell -2.4% in Sterling terms, the worst performing region year-to-date for UK investors. The US 10Y yield continued its rise, up 6.9 bps to 1.4%, at one point hitting 1.6%, and the UK 10Y rose 12.2 bps to 0.8%. Long-term yields are now trading at their highest level since the pandemic. Gold fell -2.3% on the week, while Oil rose +4.4% to $62.7.
Weekly Market Update: Investors dilemma: Cheaper bonds or returning dividends?
Markets returned to positive territory this week, supported in part by progress on the Biden stimulus bill. However, chair of the Federal Reserve Jerome Powell’s speech, with a lack of updates to current policy, disappointed investors leading to a sell-off on Thursday afternoon. US equities rose +1.7% in Sterling terms. UK equities rose +2.5%, with UK equity markets benefiting from rising oil prices. Emerging Markets grew +0.9% in Sterling terms, although this was a more moderate +0.1% in local currency terms. Globally the best performing sector was Energy, whilst IT was the worst performing, as the rising yield environment impacted valuations. Japanese equities rose +1.0%. The US 10Y yield continued its rise, up 16.1 bps to 1.6%, while the UK 10Y fell 6.4bps to 0.8%. Gold fell -1.1% on the week. Oil rose sharply, up +8.4% on the week to $66.5 following the OPEC meeting where it was decided to hold production at current levels, when a rise in production had been anticipated.
Weekly Market Update: The Yield, Not “Inflation” Will Determine the Rotation
Equity market gains early last week were, broadly speaking, eroded as bond yields continued to rise, reaching one-year highs. Amid falling oil prices and rising political uncertainty caused by potential bans on vaccine exports coming out of the EU, many major equity markets fell last week. US equities fell -0.5% from record highs in Sterling terms, despite the country surpassing 100 million vaccinations on Friday. UK equities fell -0.7%, now down -2.4% from their 52-week highs in January. Globally the best performing sector was healthcare, whilst energy, due to oil prices, was the worst performing. Japanese equities rose +3.6% and are the best performing major equity markets this year. The US 10Y yield continued its rise up 9.6bps to 1.7%, while the UK 10Y rose 1.6bps to 0.8%. Gold rose +1.3% on the week. Oil has seen back-to-back weekly declines, down -6.1% to $61.2 a barrel, due to a glut of supply and weakening demand forecasts.
Weekly Market Update: UK Equities on Track for Second-Best Month on Vaccine Rally
Market Update Once again vaccine optimism supported global equity markets; this time it was the turn of the AstraZeneca vaccine, which can be more readily stored and transported. Global equities rose +2.1% for the week in Sterling terms. Financials and Energy were the two best performing sectors, as both sectors would benefit greatly from a […]
Weekly Market Update: Rational Exuberance
Markets opened positively this week thanks to the impact of stronger than anticipated US payrolls data released over the bank holiday. Meanwhile, the EU vaccination campaign is finally beginning to pick up pace. US equities rose +3.4% in Sterling terms, reaching further record highs. UK equities rose +2.7% in the final week before the second phase of lockdown easing. European equities rose +3.2% in Sterling terms, supported by the increased likelihood of fiscal stimulus in the region. Emerging market equities fell in local currency terms, but gained +0.1% in Sterling terms. Globally, the best performing sector was information technology, whilst energy was the worst performing. The US 10Y treasury yield fell slightly down 6.3 bps to 1.7%, while the UK 10Y gilt yield fell 2.1 bps to 0.8%. Gold rose +1.6% last week. Oil fell for the second week, down -2.8% to $59. Oil has fallen almost -20% from its earlier surge, driven partly by a more challenging route out of the pandemic than originally forecast.
Weekly Market Update: Caveat Emptor
UK equities reached the highest level in over a year as part of a broad-based rally in equities globally. Equity markets continue to benefit from increasing risk appetite as investors become increasingly bullish on a 2021 recovery. UK equities rose +1.6%, although it remains one of just a few regions not back to all time highs.US equities rose +0.7% in Sterling terms, the stronger growth moderated by Sterling rising +0.9% against the US Dollar. Globally the best performing sector was materials, whilst telecoms lagged other sectors. The US 10Y yield fell 7.9 bps to 1.6%. The UK 10Y yield was more or less unchanged, down just 1.0 bps to 0.8%. Gold rose +1.1% on the week, although it remains -7.6% so far this year. Oil rose +5.7% last week to $63.1 a barrel. Oil is up +28.5% this year. The jump in oil prices comes in spite of global coronavirus cases beginning to rise in many regions, with several European and Asian economies looking likely to increase the stringency of lockdowns.
Weekly Market Update: Indian Covid Crisis Captures Attention of Markets
Equity markets ended the week largely unchanged, with the largest movements seen in Japanese and UK stocks. UK equities fell -1.1%, driven in part by a falling oil price, as the global economic outlook increasingly uncertain, with clear inequality in the vaccination progress between regions, dampening expected demand for oil. US equities fell -0.3% in Sterling terms, with plans to raise capital gains tax only making a slight impact on US markets. European equities rose +0.2% in Sterling terms due to currency effects, having fallen -0.4% in local currency terms. Emerging markets were the only risers in local currency terms, and were up +0.1% in Sterling terms. Globally the best performing sector was healthcare, whilst energy was the worst performing. The US 10Y yield fell slightly by 2.2 bps to 1.6%, while the UK 10Y fell 2 bps to 0.7%. Gold fell -0.2% on the week. Oil fell as the economic outlook deteriorated, down -1.7% on the week to $62.1.
Weekly Market Update: Consumer-Led Recovery at Close to Fastest Pace in Modern History
Once again many major equity markets finished the week not far from where they started. Market attention was squarely focused on the Federal Reserve, where chairman Jerome Powell promised not to raise rates in the near term; as a consequence, markets did not sharply react in either direction. US equities were flat in US Dollar terms, but up +0.2% in Sterling terms. UK equities were the best performing region, up +0.5% last week. European equities fell for the second consecutive week, down -0.8% in Sterling terms. Emerging markets fell -0.2% in Sterling terms. Japan was the clear laggard, where earnings failed to meet expectations and the Bank of Japan kept policy unchanged. Japanese equities fell -1.9% in Sterling terms. The US 10Y yield rose on improved economic data, up 6.8bps to 1.6%, while the UK 10Y rose 9.8bps to 0.8%. Gold fell -0.3% on the week. The better than expected economic data helped oil to rise +2.4% last week to $64.4.
Weekly Market Update: Mixed Results in Equity Markets as Economies Reopen but US Jobs Disappoint
With many regions operating a shortened trading week, returns varied significantly across major equity markets. UK equities provided the best returns to Sterling investors, up +2.4%. The rise in UK equities was helped in part by rising commodity prices, with miners and energy firms benefiting from rising metal and oil prices. European equities provided the next best returns, up +1.7% in Sterling terms. US equities rose a modest +0.2% in Sterling terms, though up +1.3% in local currency terms, as the rotation from growth to value impacted returns. Emerging markets fell -1.0% in Sterling terms. Japanese equities rose +1.3% in Sterling terms, not quite enough to move the region into positive territory year-to-date. The US 10Y yield fell temporarily on bad jobs data, although recovered somewhat, ending down 4.9bps to 1.6%, while the UK 10Y fell 6.7bps to 0.8%. Gold rose +2.4% on the week, while oil rose a further +1.0% to $65.4.
Weekly Market Update: US Inflation Unnerves Equity Markets
Global economies are reopening, and moving into the recovery phase, this pickup in activity has lead investors to question the potential impact on inflation. Investors are cautious of whether inflationary effects will be transitory or long-lasting. The US inflation reading unnerved markets and all major equity markets fell last week. US equities fell -2.2% in Sterling terms, partly driven by currency effects, markets had sold off sharply at the start of the week before recovering in the latter half. UK equities, which typically move inversely to Sterling, due to high levels of overseas earnings, fell -1.2%. Japanese equities fared worst last week, caught in global equity volatility and increased lockdowns, falling -4.0% last week. Despite strong Chinese equity performance, emerging market equities fell -3.8% in Sterling terms. The US 10Y yield rose 5.1bps to 1.6%, while the UK 10Y rose 8.2bps to 0.9%. Both gold and oil were nearly unchanged, falling -0.2% and -0.1% on the week respectively.
Weekly Market Update: Markets Grapple With Eventual Tapering of Asset Purchases
In a relatively volatile week of equity market trading, ultimately most major equity markets ended nearly unchanged. Following on from US inflation last week, there was increased focus on the UK and EU readings this week, with investors looking for any evidence of a potential shift in monetary policy. US equities fell most of major equity markets for British investors, down -0.7% in Sterling terms, although more modestly in local currency terms. UK equities ended a mixed week down -0.2% as the effects of stronger than anticipated labour market data and inflation played out. Emerging markets and Japanese equities saw a role reversal last week as they moved from laggards to leading markets, with emerging market equities providing the best returns to Sterling investors up +1.4% on the week. European equities rose +0.6% in Sterling terms. The US 10Y yield fell -0.7bps to 1.6%, while the UK 10Y fell -2.7bps to 0.8%. In commodity markets, gold rose +1.7%, while oil fell -2.9% to $64.1 a barrell.
Weekly Market Update: Sterling Strength Erodes Equity Gains
Market Update A generally positive week for equities in local currency terms was slightly negative in Sterling terms as markets became increasingly optimistic about a UK trade deal with the EU, sending the Pound higher. UK equities were the notable exception for the week, though down only -0.1%. Overall, global stocks gained +1.7% in local […]
Weekly Market Update: Likely Biden Victory Helps Equities to Best Week in Over Six Months
Market Update Global equities rallied last week with US stocks in particular posting their largest weekly gains since April as investors reacted to the increased possibility of a divided government, with a potential Biden win and continued Republican control of the Senate. In Sterling terms US stocks were up +5.6% while both UK and Global […]
The Trillion Dollar Question – Can We Lose Faith in Central Banks
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Shariah Investing: the growth of the Islamic Finance gives private clients more options than ever before
This article is the first in a series about Islamic investing Most investment advisers have encountered investors looking for Shariah compliant portfolios at some point. My own experience has previously been one of frustration as the universe of investable funds did not offer enough options to be able to construct portfolios which satisfied clients’ risk […]
Monthly Market Update: New Equity Highs as Economies Tread Water
Markets welcomed signs of an easing in geopolitical tensions in October, with risk assets generally outperforming traditional safe havens. The US and Chinese authorities moved closer to agreeing a partial deal on trade, while the UK once again edged back from the precipice of a no-deal Brexit. Global central banks reiterated their dovish stances and […]
Weekly Market Update: Markets Rattled by Iran Tensions
Read our full Market Update Market Update U.S. stocks declined modestly last week, after a sharp rally at year-end and a new record high on the first trading day of the year, as tensions rose between the US and Iran following an airstrike in Iraq that killed a prominent Iranian general. US equities were down […]
2020 a Year of Clarity?
Read our Full Monthly Market Update Global economic data is mixed. On the one hand, leading indicators and trade indices suggest that the global economic deceleration might be ending, and growth bottoming out, at least for this part of the cycle. On the other hand, manufacturing data persistently indicates contraction, especially in capital goods orders, […]
Q1 2020 Outlook
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Weekly Market Update: Oil and stocks sell-off on coronavirus fears
Read our full Market Update Week 4 Market Update Equities closed the week lower as an outbreak of the coronavirus in China made global headlines. Global stocks fell -0.8% in local terms, which translated into -1.2% in Sterling terms. UK markets fell -1.2% with Financials and Energy the worst performers. Oil has been particularly affected […]
US 10 Year Yield at all time low in response to Coronavirus fears
Download our Full Market Update here Market Update Global stocks saw a sharp sell-off last week after COVID-19 cases spiked in Italy, Iran and South Korea, pushing recession fears higher and expected corporate earnings lower for 2020. Global stocks fell -9.4% in Sterling terms, with US equities experiencing the quickest correction since the Great Depression, […]
Weekly Market Update: Stock markets suffer record daily falls, central banks cut interest rates to combat coronavirus induced slowdown
Read our full Market Update Week 11 Market Update UK equities were down over 8% this morning, with the FTSE 100 down -32% over the last month as markets are now starting to price in a coronavirus induced global recession. Oil prices continued to slip, down nearly 50% YTD in USD terms. This fall has […]
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Read our full Market Update Market Update The rally in risk assets came to a grinding halt last week on fears of a second wave of infections in the US, with virus rates up in many states, and the Federal Reserve offering up a gloomy economic outlook. Stocks are also down this morning on news […]
Weekly Market Update: Lockdowns and US Election Raise Market Volatility
Market Update Global equities suffered their worst week since March, with the sell-off attributed to renewed virus related lockdowns across most of Europe and the final stretch of the hotly contested US presidential campaign. Global and US equities were both down -5.0%. This was despite the fact that Tech giants Alphabet, Amazon, Apple and Facebook […]
Weekly Market Update: Flexible Federal Reserve Sends Cable and Yields Higher
Read our full Market Update Market Update US equities climbed +1.4% last week with, major indices setting new record highs, as US Federal Reserve Chairman Jerome Powell announced a shift in how the Fed views inflation, saying it won’t increase interest rates to respond to low unemployment levels and also won’t worry as much about […]
Weekly Market Update: Virus Fear and Bank of England Comments Drag Down Equities
Read Our Full Market Update Market Update Globally stocks were negative in local terms for the second successive week, losing -1.2%. Sterling recovered some of its losses against the US Dollar, up +0.9% despite comments from the Bank of England suggesting an increased likelihood of rate cuts. UK stocks outperformed global stocks in Sterling terms, […]
Weekly Market Update: Rising Equities Shrug off Political Uncertainty
Read our full Market Update Market Update Major global markets were generally positive in local currency terms, but a strengthening Sterling, up +1.5% for the week against the US Dollar, eroded gains for British investors. US stocks recovered from their four-week losing streak to rise +1.5% in US Dollar terms, but would return -0.2% due […]
Quarterly Investment Newsletter Autumn 2020
Global stock markets built on the astonishing rebound from the Spring to post further, albeit more modest, gains during the third quarter of the year. Global stocks rose by nearly 5% in Sterling terms. That said, again the rises were far from uniform geographically, with US and Japanese equities posting strong returns whilst Europe struggled to a marginal positive return and UK equities lost further ground. Aside from Equities, Gold started the quarter strongly, but then sold off in early August as safe haven assets including the US Dollar retracted in less volatile markets.
Weekly Market Update: Increasing Likelihood of US Government Trifecta Lifts Equity Markets
Read our Full Weekly Market Update Market Update A reduction in uncertainty in the United States helped US equities to their best week in three months, up +3.2% in Sterling terms, as investors begin to price in a Biden presidential victory. UK stocks looked past weaker than anticipated GDP growth to rally +2.0%. Investors appeared […]
Weekly Market Update: Markets Mixed As Lockdowns Reimposed Over Second Wave Concerns
Market Update Global equities were narrowly down -0.3% on the week in local terms, however Sterling weakness once again boosted returns to British investors. The US was the best performing region, up +1.0% in Sterling terms. This coming week will kickstart earnings season in the US, where earnings are expected to fall sharply relative to […]
Weekly Market Update: European Lockdowns Weigh on Equity Markets
Market Update European equities sold-off as economic data begins to point towards a stalling recovery and coronavirus infection trends point towards tighter restrictions. European equities were down -1.4% in local currency terms, narrowing to a -1.2% loss in Sterling terms. UK stocks improved in the second half of the week, buoyed by increased employment support […]
Weekly Market Update: Monetary Policy Struggles to Support Markets
Read Our Full Market Update Market Update The market sell-off continued last week, despite government pledges of further fiscal support and central bank liquidity injections, as countries moved into lockdown and tightened border controls to contain the coronavirus outbreak. UK equities were down -3.2% with Housebuilders, Industrials and Energy companies experiencing the brunt of the […]