Market Outlook Report – June 2019

Market Overview

​June 2019 

​Threat of Mexican tariffs condemned stock markets to worst month of year in May

Stock markets suffered their worst month of the year in May as escalating trade tensions raised the prospect of a global economic slowdown, adding further downward pressure.

The concerns over the worsening relations between the United States and China had already soured investor sentiment, but the equity sell-off accelerated after President Trump threatened to impose tariffs on Mexico.

Relevance / Impact 

US-China trade war truce boosts global share prices

The announcement of a truce between America and China lifted share prices worldwide on the first trading day of this month, as the two largest economies revived efforts to resolve their trade war.

President Trump cheered the equities rally after an agreement was reached at the G20 summit in Osaka, Japan, at the weekend to hold off on putting more tariffs on Chinese exports.

Relevance / Impact 

Woodford Equity Income suspends dealing after spike in withdrawals

At the beginning of June, dealing in Woodford Equity Income has been suspended 'with immediate effect and until further notice' after a spike in redemptions from Neil Woodford's flagship fund.

Authorised corporate director Link Fund Solutions said in a statement that the suspension was 'intended to protect the investors in the fund' following 'an increased level of redemptions'.

It was recently announced that investors face the prospect of being locked inside Neil Woodford’s stricken fund and paying fees for at least another four weeks after it was decided that withdrawals would remain blocked and as the stockpicker defied calls to waive the charges.

Relevance / Impact 

Calls for tougher rules on open-end funds

The governor of the Bank of England has called for tougher regulation on open-ended investment funds such as the one run by Neil Woodford that has been suspended.

Mark Carney said new powers were needed “to guard against the build-up of systemic risks” in funds with liquidity mismatches where investors can pull their money out at short notice but the assets are hard to sell.

Relevance / Impact

US Fed Chief's interest rate hint triggers surge on Wall Street

Wall Street reacted gleefully to news that the Federal Reserve could cut interest rates if trade disputes with China and Mexico cause the American economy to slow.  In early June, the markets enjoyed their the best one-day percentage gains since January 4.

Then in mid-June, the US Federal Reserve held its base rate steady, but laid the groundwork for a cut later in the year as its chairman promised to stand his ground against a barrage of attacks from the White House.

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.