The beginning of 2019

2018 ended with the markets recording significant falls, particularly focused on the last quarter of 2018.

On 31 December 2018, the BBC provided a helpful and simple summary of the markets over 2018:

The FTSE 100's traditional early New Year's Eve close saw it end the year down 12% at 6,728.13 points.

Big European and Asian markets faced similar losses in 2018, while the main US indexes saw their worst performance since the 2008 financial crisis.

The Dow Jones ended the year down 5.6%, the wider S&P 500 fell 6.2% and the tech-heavy Nasdaq lost 3.9%.

US-China trade woes and slower global growth are among issues blamed for the poor showing.

Analysts have also cited US political uncertainty and interest rate rises as contributing factors.

Source: https://www.bbc.co.uk/news/business-46720637

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Some have argued that major world economies are experiencing an ageing business cycle and time will tell if this is true.

There continues to be much to consider on the geopolitical and financial agenda at the time of writing, and with US mid-term elections now out of the way, and the President in part losing control of the House of Representatives, UK eyes have turned to Brexit and most recently the defeat of the Prime Minister in the 'meaningful vote' on 15 January 2019 in the House of Commons. A motion of no confidence was tabled by the Labour Party immediately after the significant defeat and this will be heard and voted upon on the evening of 16 January. With around 72 days left until the UK's planned exit from the EU on 29 March 2019, there is much overdue work for our politicians to achieve.

Focusing on the UK for the last quarter, the Chancellor's Budget at the end of October 2018, with an agenda of significant funding needs for the NHS, has been completed and was somewhat unremarkable. The challenge for the Bank of England will be to maintain a balance on interest rates and inflation – too sharp a rise now could put pressure on the UK economy and consumers; however, leaving it too late could allow inflation to become entrenched, making it harder to control and potentially forcing the Bank to make sharper hikes further down the road.

Other significant points in recent times and ahead have been:

  • Trade tariffs and trade wars
  • Brexit negotiations and the passage of any agreement through Parliament, or a position of accepting World Trade Organisation (WTO) terms.
  • The Chancellor's Budget at the end of October 2018, with an agenda of significant funding needs for the NHS which will need to be paid for from other areas (speculation abounds at this time!)
  • Steadily rising interest rates in the US (the last rise being 19 December 2018)
  • Italian Budget / spending plans which seemed to be un-nerving European markets were settled in mid-December with the EC
  • Indications of a slowdown in global growth
  • Inflation appearing to be on the rise globally

No individual asset allocations, advice or recommendations are provided during the course of this article

We hope that this update is helpful. As you would understand, this provides no individual advice or guarantees of future performance but does give an insight into current economic conditions.

Keith Churchouse FPFS

Director

CFP Chartered FCSI

Chartered Financial Planner

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