As we enter spring, markets seem to have enjoyed pockets of optimism...
Q4 GDP was revised up to 1.4% which was a strong reading but consumer confidence levels have been subdued. It was reported that car production in the UK plunged to a six-year low due to a massive drop in exports. Growth in UK service export sales also slumped to its weakest rate since 2009 in the first quarter of the year according to the survey of 7000 businesses conducted by the British Chambers of Commerce (BCC). UK household earnings have risen at their fastest rate in a decade and the HIS Markit survey suggested this month that the current downbeat consumer sentiment could turnaround in the next few months.
The UK will remain in Europe for a little longer with the exit date having been extended to 31st October as a final deadline which should ease pressure on tourists looking to visit our neighbours over summer.
US data has continued to disappoint this month with a sharp drop in housing starts together with a big fall in consumer sentiment in March, the US economy only expanded at an annual rate of 2.2% in Q4 which was well below projections.
The Federal Open Market Committee minutes released this month showed that members remain dovish citing risks to economic outlook and indicated that the future trend for interest rates remains uncertain, adopting a “wait and see” approach.
Global trade shrank at the end of 2019 according to figures released this month by the World Trade Organisation (WTO) due to trade tensions and increased economic uncertainty taking their toll. The head of the International Monetary Fund (IMF) Christine Lagarde reiterated global challenges warning that 70% of countries can expect a slowdown in growth over the coming year. This was further evidenced by Italy admitting that economic growth in the third-largest European economy will be substantially lower this year than previously forecast, suggesting that the country may burst its budget deficit cap.
The European Central Bank announced that it intends to keep monetary policy in the area unchanged confirming a dovish outlook and intent to hold rates steady until “at least” the end of 2019. China and the EU have set a 2020 target date for a long-pursued investment treaty.
Equities & Commodities
Gold has been pushed to the low of 2019 but seems to have found support as Treasury bond yields have continued to recover. Crude Oil reached a five-month high of over $74 following a US government announcement that it will end exemptions from Iranian oil sanctions it had granted to eight countries, among them China, India and Japan. The FTSE250 and FTSE100 both hit six-month highs this month on Brexit delays.
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