• After a tough end to 2018, the first quarter of 2019 has generally seen markets rally to bounce back up into more positive territory.
  • In the US the Federal Reserve is taking a more dovish approach to interest rates with no hikes expected in the near future. IT returns as the top US performer whereas the healthcare sector has struggled as the pre-election candidates set their sights on the debate over medical costs in the States.
  • Although not yet conclusive, trade talks between the US and China have been extended giving hope for an ease in the tensions between the two nations.
  • Brexit uncertainty continues to dominate news regarding the UK as a deal is still yet to be reached.
  • Europe has seen a more mixed start to the year with buoyant market growth but news of Italy falling into recession in the last quarter of 2018 along with disappointing economic data from Germany.
  • Asian and emerging markets generally saw a strong start to the year as trade worries eased and markets rallied to make up for the woes of 2018’s final few months.
  • China has lead the pack this quarter in Asian markets as news came that the MSCI will increase its weighting of Chinese shares in its indices and further US tariffs were suspended in favour of continued talks with the US. Alongside this the Chinese Government has announced increased spending, tax cuts and cuts to minimum reserves for banks. These supportive measures come as a response to an economic slowdown that continued this past quarter.
  • Geopolitical issues continue to influence markets both locally and globally including India (upcoming elections and tensions with Pakistan), Italy (Building bridges with China through an ambitious trade network), the UK (Brexit) and Turkey (Concerns over Government handling of their currency strength).



The US saw a significant rebound this quarter following a disappointing 4th quarter last year. In January the Federal Reserve (Fed) confirmed that it would adjust it’s plan for upcoming rate changes, becoming more dovish in its approach with the market expectation being that there will be no increases in the near future with a small possibility of a rate cut. By March growth in the US has slowed to a more cautious pace bringing an overall gain for the quarter. The top performer so far for 2019 has been the IT sector following its fall from grace during the turbulent second half of 2018. In contrast the healthcare sector has struggles this quarter with sharp declines in April driven by political and regulatory uncertainty as the price of healthcare becomes a major talking point in the start of the run-up to the presidential elections in 2020. Trade talks between the US and China have been ongoing over the past 3 months with both sides reporting progress and further US tariffs suspended in March in order to continue negotiations. Although no deal has been reached this marks a step towards a more positive outlook for trade relations between the nations



Brexit remains the major headline when discussing UK markets with the deadline now extended into the next quarter giving Theresa May more time to secure a deal for her country. This move saw domestic stocks rise as a possible end came into site for the debacle. Brexit uncertainty has weighed heavily on business investment with GDP growth decelerating to 0.2% and the Bank of England cutting its 2019 GDP growth from 1.7% to 1.2%. However, the UK labour market continues to buck the slowdown trend with real wages remaining in positive territory against a backdrop of muted inflation. Moving forwards we expect the ongoing Brexit saga to exert a powerful influence over the UK market whether through uncertainty or an eventual end outcome.



Although Europe enjoyed some bounce-back from its poor Q4 performance this hasn’t quite been enough to shake its lingering socio-political issues across some of its respective states. Data released this quarter shows that the Eurozone economy grew by just 0.2% in the final 3 months of 2018 with Italy falling into recession and Germany struggling to keep its head above water as they enter stagflation. In the midst of this, the European Central Bank has announced the revival of a stimulation programme for banks – Targeted Longer-Term Refinancing Operations – which will support cheap lending to banks. In more positive news the ongoing US-China trade talks have helped lift some of the gloom for European traders in the global markets, indeed Italy has even announced its endorsement of China’s Belt and Road initiative – designed to be a modern-day Silk Road investment and infrastructure network between Europe and Asia. This controversial strategy was critiqued as the Italian Government failed to consult with its European and US allies but marks a symbolic step by the first G7 country to agree to the project in an attempt to increase trade links with China.


Asia and Emerging Markets:

In general, Asian and Emerging Markets had a strong start to this year, rebounding from their poor Q4 performance. China has led the pack this quarter benefitting from trade negotiations and an anticipation that leading authorities will introduce supportive measures to counter its recent economic slowdown. China’s economy recently slowed to its weakest pace since 1990 leading to the Chinese Government lowering its growth target and announcing both an increase in public spending and tax cuts while the Central Bank cut the reserve requirement for banks. The value of shares also rose on the news that the MSCI was to increase its weighting of China in its indexes. Elsewhere politics continued to exert a strong effect – Indian stocks rose this quarter as tensions eased with Pakistan along with expectations that the current coalition may win a re-election in May spurring greater construction and infrastructure spending. Turkey has continued to struggle with a sell off in March after the Lira weakened significantly against the dollar amidst concerns that Government’s response to the world’s economy may ward off foreign investors just as the country slips into recession. Japan saw muted growth compared to other Asian markets returning around 7.7% albeit with sporadic bouts of volatility, mostly driven by concerns over interest rates and the possibility of a global slowdown affecting exports with the tech and automotive sectors affected most.