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Market View

Market View: March 


World temperatures soared in February to their highest levels ever. This may have accounted for why some investors felt hot under the collar that month, but their unease was more likely to have been caused by the weak financial outlook. 

The start of February looked fairly bleak. Global equities continued to be under pressure for the first half of the month, posting a negative return in US dollar terms. 

Continued anxiety about the state of the global economy triggered a rally in Treasury, Gilt and Bond yields falling for the second consecutive month. The fall in bond yields signalled investor flight to safety in order to find perceived safe havens for their cash.

In the Euro-zone, weak inflation data reinforced expectations of further monetary policy easing. Brexit dominated headlines in the UK with the potential financial impact of the UK leaving Europe being discussed widely. Opinion on the impact of Brexit is divided. However concerns about the effect on the British economy, as well as the fall in the value of sterling, continues to be debated. The true impact of the UK leaving Europe is unknown, but we can expect stock market volatility in the lead up to the vote in June. When the Brexit referendum was announced at the end of February, sterling immediately felt the pressure and the pound fell against the dollar to its lowest level since 2009. 

US equities registered a small negative return for February. Investors deferred expectations for further rate increases after the Federal Reserve Chair warned that global financial market turbulence could set back US growth. During February the price of oil started at just below $35, dropped to $30 and finally rose again to close at above $36. Japanese equities posted sharp declines amid doubts over the success of “Abenomics” (their economic policy based upon three arrows: fiscal stimulus, monetary easing and structural reform), a stronger yen and concern over the slowdown in China. Emerging markets outperformed their developed world counterparts, although neither managed to post a positive return for February.

Global stock markets rallied slightly by the end of the February as investor optimism appeared to return. A rise in share prices was reported from America, Australia, and Asia; Europe showed signs of recovery. Despite Moody threatening China with a downgrade of the country’s credit rating, the Shanghai Composite posted its best day since November. The FTSE 100 closed at the end of February at 6,097.

Continued volatility and global economic uncertainty will cause further unease for investors over the coming months. It’s at times like these where clients need the most educating, particularly about the importance of sticking to their long term plans.  

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.

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