Investment Outlook - Summer 2017 Edition

The quarter in review

An introduction to our Summer 2017 Investment Outlook

After pausing for breath in early April, equity markets rose throughout May. June, though, saw UK and European markets give up much of their gains. The US, Japan and emerging market equity markets all had a reasonable quarter.

It was also a quarter of key political events. Emmanuel Macron’s election as French president was viewed positively by markets, with ECB president Mario Draghi noting “political winds are becoming tailwinds” in Europe. Meanwhile Theresa May’s decision to call an election weakened the strength and stability of her government as it embarks on Brexit negotiations, increasing the level of political uncertainty in the UK.

Falling real wage growth and consumer confidence do not bode so well for the UK. It will be interesting to see as and when the BoE feels the need to join the tightening trend and raise rates. Recent comments from Governor Mark Carney suggest that could be later this year. Mixed messages from the BoE are keeping sterling volatility elevated. Sterling remains at historically low levels versus the US dollar.

Over in the US, unemployment levels have been falling sharply and the Federal Reserve (Fed) raised interest rates in June. US equities have historically been resilient in periods of rising interest rates, which brings us nicely onto the main theme of our Summer 2017 Investment Outlook.

As well as our usual review of the performance of and changes to our Recommended Funds list, we focus on the world’s largest and most liquid equity market – the US – highlighting some of the attributes which make it a key part of any global portfolio, as well as the household names which are some of the largest constituents of its index.

We also consider why investors should be aware of the size of the US weighting in any global equity index and the fact the US market looks more expensive than some others at present.

We hope you enjoy reading and have a great summer.

 

Markets performance review

Important Information

The information we provide in this Investment Outlook is for information and discussion purposes only and not intended to be a personal recommendation to invest, which means we have not assessed your investing knowledge and experience, your financial situation or your investment objectives.

Investors should be aware that with self-select products or services the value of investments can fall as well as rise unlike cash investments. You may get back less than you invested. Past performance is not a reliable indicator of future performance. 

If you are unsure about the suitability of a particular investment you should speak to a suitably qualified financial adviser.