Market Outlook Report – December 2018

Market Overview

December 2018

FTSE 100 ends year down 12.5%
Global stock markets have had a turbulent 12 months, as investor confidence has been buffeted by trade tensions, uncertainty about the direction of the world’s economies, fears of a global trade war and a ratcheting up of interest rates.

 Consequently, all the leading stock-market indices are showing losses for the year

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Investor confidence in world economy at lowest since crash
Investors are more pessimistic about the world economy than they have been at any point since the 2008 financial crisis, according to a survey of leading money managers.

Concerns about a slowdown, compounded by fears of an escalation of the US-China trade war, have prompted them to move into defensive assets and dump shares, a report by Bank of America Merrill Lynch (BAML) said.

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Barely a fifth of investments make a profit as market boom time ends
Just eight investment sectors delivered a positive return this year as markets were hit by a global sell-off, research has revealed.

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Lindsell Train Funds
It has been a stellar year for this fund’s manager, Nick Train, whose “buy and hold” approach has shone in recent months.  Train likes big consumer brands and particularly drinks groups, because they have loyal customers who continue to buy the products regardless of the economic climate.

The fund has excelled by avoiding “Faang” stocks (Facebook, Amazon, Apple, Netflix and Google), which have been the favourites of other fund managers this year.  He could be particularly well placed if the tech sell-off, which started in October, continues.

Darius McDermott, managing director of Chelsea Financial Services, said: “There is no reason the fund can’t continue to do well.”

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China is 'set to overtake the US economy in 14 years' 
China is on track to become the world’s largest economy by 2032 as the United States faces a “serious budget deficit problem”, research suggests.

President Trump’s trade war with Beijing is stalling Chinese growth, however, pushing back by two years the moment at which it is expected to claim top position.


A calm start to 2019
Leading shares began the new year the same way that they ended the old, but they crept into the black in the final few minutes of trading.  Though depressed by concerns about international trade tensions and the added pressure of disappointing manufacturing figures from China, the FTSE 100 ended 6.10 points up at 6,734.23, a gain of 0.09 per cent on the first trading day of 2019.  The less internationally exposed FTSE 250 ended 84.65 points up at 17,586.70, a rise on the first trading day of 2019 of 0.48 per cent.

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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 January 2019.