Investment commentaries

Weekly market updates

Insights for professional advisers

Investment Review
Month ending 31 March

Markets

A very challenging month for equities, as trade war fears and tech worries weighed on sentiment and the US dollar. All main equity regions fell in GBP and local terms. In GBP terms, US equities were the worst effected, falling -4.7%. Japanese equities (-3.6%), emerging markets (-3.4%) and Europe (-3.3%) followed close behind. UK equities proved more resilient, falling -1.8%.

Bonds continued to make gains in March in local terms, with UK Gilts continuing to outperform (+2.2%), followed by European government bonds (+1.6%). European and US government bonds appreciated +1.2% and +0.5% respectively in local currency terms.

GBP reversed course, strengthening across the board, gaining +1.6% versus USD and +1.5% versus JPY. GBP also gained +0.8% versus EUR.

Both oil and gold also reversed the previous month’s weakness in USD terms. Oil strengthened +5.35%, while Gold gained +0.5%.

Investment outlook

So far 2018 has offered investors a rather bumpy ride. While we expect strong economic and profits growth to continue, rising interest rates and the risk of a potential trade war are bringing an added level of risk to markets.

In light of the current environment we have trimmed risk over recent months. We believe that we are only part way through a correction, and further drawdowns may be still to come. Nonetheless, in the current economic environment, we believe that shares can continue to outperform bonds, although, in contrast to 2017, when returns were high and volatility was low, we expect more modest returns and higher volatility.

We remain slightly overweight equities and underweight bonds, having trimmed our overweight equity position. At a regional equity level, we remain underweight UK equities. We continue to favour Europe, Japan, emerging markets and the US.

Investor insights

  • Investor Insight Spring 2018

    Published:
    17/04/2018
    Filesize:
    286Kb
    Filetype:
    PDF
    After an almost perfect year for returns in 2017, markets were ripe for a correction and increased volatility, and this came in spades in Q1. The catalysts were initially the prospect of tighter liquidity and anticipated interest rate rises in February, triggering the first sell off in risk assets. Markets briefly rebounded and then corrected again on fears that threatened tariffs and increased protectionism by the US could evolve into a full blown trade war. Recently markets have being moving up and down on headline news, which can be unsettling for clients.
    View download
  • Investor Insight Winter 2017/18

    Published:
    15/02/2018
    Filesize:
    236Kb
    Filetype:
    PDF

    We believe 2018 will continue to enjoy strong economic and profits growth, but rising interest rates and inflation are bringing an added level of risk to markets. We believe that shares will continue to outperform bonds. However, in contrast to 2017, when returns were high and risk (as measured by volatility) was low, we expect more modest returns and increased volatility. In other words, risk assets can move higher but investors will experience more bumps along the way.

    View download

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