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Market View

Market View: January

 

In December you might have thought that investors were waiting for the results of the UN Climate Change Summit. Share indices pulled back on the stick, recovering their early month losses, on the same day that an emissions agreement was announced.
 
Perhaps we would live in a different sort of world if stock markets were driven by things like climate change deals, but for now we will have to make do with interest rates, unemployment figures, and growth forecasts. On December 16th, the US Federal Reserve announced that they had sized up the economy and that the time was right to increase rates. It was a modest rise of 0.25% in the target range, but it carried real symbolism. US rates had been – and UK rates remain- at ‘emergency’ levels set during the 2008 financial crisis. But with an unemployment rate falling below its postwar average level, job openings above their historic average and other indicators suggesting a normal (or rapidly normalising) economy, the Fed decided that the era of zero rates should end.
 
Some writers were unconvinced by the case for a rate rise, among them David Blanchflower, a well-known economist and member of the UK’s Monetary Policy Committee until 2009. In his view, the improving economic picture is less important than the weakening outlook for inflation: “It seems to me there is a 50/50 probability that this hike will have to be reversed,” he wrote in the Guardian.  Nevertheless, we expect to see a UK rate rise in 2016.
 
Most asset classes fell slightly over the month: the ‘best’ performer in Sanlam’s risk benchmarks was developed world shares with a -0.49% slip; the worst was the UK with -1.89%. Investors will have experienced minor falls over the month, but these are well within expected ranges.  We enter 2016 with our usual blend of optimism and caution.

Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and may be affected by exchange rate variations. As a result, the benefits available under any policy/account linked to the model portfolio may be lower than anticipated. You may not get back the amount originally invested. The portfolios referenced above are managed by Sanlam Four.

Sanlam & Sanlam Investments and Pensions are trading names of Sanlam Life & Pensions UK Limited (SLP (Reg.in England 980142)) and Sanlam Financial Services UK Limited (SFS (Reg. in England 2354894)). SLP is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. SFS is authorised and regulated by the Financial Conduct Authority. Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.