The unwelcome volatility at the beginning of the year was succeeded by a period of good stock market progress, though pockets of uncertainty were evident at times.
Investors warmed to the ideas that spooked them earlier in the year as inflation worries subsided and were replaced by fears of escalating ‘trade wars’, fuelled by the US’s tariffs on many countries, including some of its allies. Another interest rate rise from the US was accepted by markets without much fuss and most developed market bonds ended up broadly flat after yields on the 10-year US Treasury moved up to 3%, a level which seems to deter further selling.
While we believe that further interest rate increases have the potential to rock markets further down the line, investors seem to be concentrating on tariffs and trade for now. Growth has remained resolute and economies are expanding in nearly every corner of the globe and corporate earnings remain strong, if not quite as impressive as they were over the last year.
As ever, our portfolios are well-positioned to mitigate much of the impact of market swings and to capitalise on opportunities when they arise. We look forward to the challenges posed by an ever-evolving landscape and remain vigilant to the dangers of over-stretched valuations.
Our latest Market Review & Outlook document takes a look at some of these issues and outlines some of our recent thoughts.