Our June 2019 market update has been written by Jordan Buchanan using data supplied by Quilter Cheviot, and from publicly available data sourced from Bloomberg.com.

General Market Summary in May

In May a possible breakdown in trade negotiations between the US and China, together with a potential new round of tariffs on imports from Mexico, ignited investors’ fears of a further deterioration in global growth. Overall GDP forecasts show little change, but business surveys suggest that manufacturing momentum is slowing along with global exports and investment. While the US ISM remains in expansion territory, several other regions are pointing to contraction in the manufacturing outlook including China, Europe and the UK. In contrast consumers remain robust – particularly in the US where retail sales are strong and job openings plentiful, while sentiment surveys indicate that consumers are optimistic both in the US and Europe.

Equity markets

While equity markets appear to be in a ‘wait and see’ mode bond investors have moved to discount the possibility of US recession and a cut in US rates, perhaps as early as late summer. The US Treasury curve is mildly inverted – again – with the 10-year yield of 2.1% below the Fed funds effective rate of 2.4% and negative yields in Japan and Europe.

Trade

We are in a quiet period for company news as we enter the early summer months. This leaves share prices more subject to political influences and overall sentiment. The key question is what impact the current trade tariffs and threats of more are having on real economic activity. The G20 meeting at the end of June could provide the opportunity for ‘good’ news flow on the trade front.

Market Update Video

This month, the market update video was presented by Karl Williamson and Nick Davis from Nexus Global Portfolios.

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