General Market Commentary March 2018

Much like the Easter weather, global stock markets closed the first quarter on a distinctly soggy note. The FTSE World Index lost 4.2% in total return terms over the three months period as measured in sterling. Within that, the UK was down by nearly 7%, buffeted by an adverse move in the pound, which dragged on returns. Interestingly, Japan and the Emerging markets held up better than most, recording falls of around 2%. Despite positive economic data, markets are fretting about the prospect of some form of trade war between the US and China, which would likely act as a damper on economic growth. Additionally, US technology stocks have been impacted by the fallout surrounding Facebook, prompting profit-taking after a period of strong share price performance by the sector.
The still supportive global economic background is likely to be overshadowed by the US protectionist measures, until the details have been formally ironed out over the next couple of months. The President’s aim to reduce the $375bn US-China merchandise deficit by $100bn is more a negotiating tactic than something that is realistically achievable, however may continue to unsettle risk assets. Bond yields fell over the month, but the expectation for further rate rises has flattened the US curve and means monetary policy is tightening even before inflation reaches the Fed’s 2% target.

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This information has been produced by Jordan Buchanan using data supplied by Quilter Cheviot, and from publicly available data sourced from Bloomberg.com