Stockmarkets across the globe have bounced back from their December lows, with the UK rising to levels it hadn’t reached since October. In the US, the Federal Reserve – their equivalent of the Bank of England – held interest rates at 2.5% and hinted they wouldn’t rise as quickly as previously thought, which boosted the US stockmarket.
US-CHINA TRADE TALKS PROGRESSING WELL
Talks between the US and China have progressed well with even President Trump’s Twitter feed sounding positive, stating talks are at an advanced stage. China’s Vice Premier Liu has also extended his planned visit to the US which is another positive sign that an agreement is close. A finalisation of any deal would have a positive impact on global markets as it would remove a huge amount of uncertainty.
Another month moves us a few weeks closer to that all-important Brexit deadline of 29 March. In the past two weeks alone we’ve had defections from both the Labour and Conservative parties to create a new political party – The Independent Group (TIG), Theresa May losing another vote in parliament and the ‘meaningful vote’ being delayed again. Is this vote fails, we could see the prospect of Article 50 being delayed. Labour has intimated they could get behind a second referendum – with the choice being between May’s deal and remaining in the EU.
The market is predicting a low level of growth, but we do believe there are some reasons for positivity. We begin the year supportive of stocks, however we do expect to become more cautious as the year progresses. The main risks still come from Brexit uncertainty in the UK, the possibility of trade talks between and US and China being derailed, in addition to the US central bank raising interest rates if markets grow too quickly.