Market Outlook Report – August 2019

Market Overview

August 2019 

Global economy enters longest expansionary phase on record

The global economy has now entered the longest expansionary phase on record and yet we believe that there is still further to go.  A recession is inevitable at some point; however, the current market conditions do not suggest that this will be in the very near term.

Relevance / Impact 

£1.3bn exodus as investors seek safety

A record £1.3 billion was withdrawn from equity funds (those that invest in shares) last month as investors displayed jitters at the prospect of a no-deal exit from the EU.

Prospect of a no deal Brexit is scaring investors 

Calastone, a global funds transaction network, said UK investors sold their holdings at their fastest rate since October 2016, with the equity funds down a net £1.3 billion in July.  Funds focused on UK shares accounted for about half of the total outflow with £410 million withdrawn.

Relevance / Impact 

Pessimism on rise for fund managers amid Trump’s trade war with China

Fund managers are at their most pessimistic about the prospects for the global economy since 2011, according to a survey by Bank of America Merrill Lynch.

Relevance / Impact 

Global slowdown applies brake to dividends

Dividend growth worldwide has slowed to its lowest for two years as the global slowdown starts to bite, according to the latest barometer of company payouts.

Relevance / Impact

The worst-performing funds, from St James’s Place to Woodford Equity Income

Neil Woodford’s Equity Income fund and the St James’s Place UK High Income fund (also run by Woodford until recently) have been named as the two worst-performing funds in the country.

Your investment will sink with these funds

Relevance / Impact 

Pound sent lower by City’s general election fever

On the first trading day of September, the pound lost more than a cent against the dollar as the sniff of a snap general election swept through Westminster and the City.

Sterling was marked down to as low as $1.2040 amid speculation that Boris Johnson was preparing to call an election.  Weak data on UK manufacturing added to poor sentiment. Before the referendum in June 2016, a pound was worth about $1.45.

Relevance / Impact 

This article is in the opinion of Reeves Independent financial advisers only and is not intended as advice and no investment decisions. The information in this blog or any response to comments should not be regarded as final advice. Please remember that the value of your investment can go down as well as up, and may be worth less than you paid in. Information is based on our understanding at ​June 2019.