August used to be known as the ‘silly season’. Everyone who made the news was away on holiday, nothing happened and newspapers were desperate to fill their pages. So rather more obscure stories made it into print…
That, of course, was before Donald Trump. And Brexit. And Venezuela, Argentina and Greece. And…
In short, August is now just another month and this year it saw the world’s two most powerful economies, the USA and China, continuing their trade war as the US imposed an additional round of tariffs on Chinese imports and Beijing inevitably retaliated. Domestically, there were more woes for Donald Trump as more members of his former inner-circle decided they would rather do a deal with the prosecutors than the President. Could he be impeached? At this stage it would seem unlikely but the net is tightening. Continue reading →
This last week has seen financial market corrections all over the world, with markets handing back the strong gains made since the start of the year. During discussions with clients this week some have asked why has this happened now? Ironically it all started with good news in the United States last Friday. This came in the form of higher than expected wage growth for workers. This in turn means that the US economy is doing well. But, at some point the Central Bank in America (The Fed) will have to increase interest rates to try and curb the rise of inflation.
Financial markets generally don’t like it when interest rates have to rise, although that sometimes this is inevitable. And so we have seen the equity markets react all around the world. There is a very old saying in finance – when Wall Street sneezes – the rest of the world catches a cold. And so this saying is still true today because with what happened in the US last Friday has sent a shock wave around the other parts of the world.
However, is this a start of a global downturn? Absolutely not in our opinion. The fundamentals of the global economy are still very strong. We are some way off a recession in many parts of the world, certainly in the US. It is just the financial markets having a little correction, that’s all. Ironically, we have had such a good run over the last 18 months or so that volatility (the downside of markets) has been something we are not used to. We have to get back to being used to it, simply because the way financial markets have been for the last 18 months is not really normal.
What should you do? If you have spare cash make use of the Impulse Save feature on the website, because it is a great time to add money to your portfolios. If you haven’t got spare cash do nothing, apart from stay off your website. As I always say ‘when financial markets are making the number one headline on the news, then you know it’s bad’ so leave off it for a while. Honestly, that is the best thing to do.
What’s the saying? ‘Close, but no cigar’. That’s how it was in October as all but two of the markets we cover rose in the month. Brazil’s market did manage to stagger up by just 14 points, meaning it was unchanged in percentage terms, but the Russian stock market let the side down, falling back by 1% in October.
While the stock markets were having a good month, the Brexit talks were having – another – stagnant month. Having been to Florence in late September, Mrs May then went and pressed the flesh in Brussels, but the warm words soon gave way to more bickering about the UK’s divorce bill. With the date for the UK’s departure from the EU another month closer, talks about a post-EU trade deal are nowhere near starting. Continue reading →
Well, we’re still here. Despite the seemingly best efforts of the leaders of the United States and North Korea – the world is still turning. But September was a month of ‘another day, another North Korean rocket flying over Japan’ and it ended with Kim Jong-un threatening to explode a nuclear bomb over the Pacific. Small wonder that South Korea is creating a special military unit with only one aim, which does not bode well for Kim. Continue reading →
“Those that do not learn from history are doomed to repeat it…” We have just had the tenth anniversary of the start of the global financial crisis: have we learned anything, or will we one day repeat the mistakes? Continue reading →
Given all the uncertainty, how have the world’s major stock markets performed in the first eight months of the year? By and large, the answer is ‘well’. The UK’s FTSE-100 index of leading shares opened the year at 7,143 and closed August at 7,431: that is a modest gain of 4% but given all the uncertainty surrounding Brexit, a gain nevertheless. The two major European indices, Germany and France, are both up by 5%, whilst in America the Dow Jones index is up by 11% at 21,948. The Dow clearly likes what it sees of President Trump’s economic policies. Continue reading →
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