Active investment commentary & analysis

Brexit, budgets and market volatility

The issues which plagued global equities in October continued unabated in November 2018. Admittedly there was a change in stance in some quarters, but broadly speaking concerns over a slowdown in growth, the potential for rising US interest rates, on-going trade tensions, Brexit and Italian budget issues continued to dominate the headlines and provide fodder for market volatility. Perhaps as a result of the falls already witnessed in the relevant markets there appeared to be a willingness to reward even a hint for resolution of these issues as witnessed by a strong rally when the US Federal reserve indicated they may consider pausing the previously announced path for interest rate hikes. So too in Italy where the populist government were reported to reconsider their much criticised budget proposals thereby avoiding the EU’s threatened “excessive debt procedure”. By month end there was still no concrete news on these measures. The news on Brexit was more tangible with Theresa May getting her plan through both cabinet and the joint EU meeting but the final hurdle of parliamentary approval now appears daunting. As far as trade wars and tariffs were concerned we witnessed much of the usual taunting from both the US and China but the real test is the upcoming G20 meeting where Donald Trump will meet President Xi Jinping of China. Third quarter earnings announcements reached their peak in November and the picture painted remains mixed.