As we move through the final quarter of 2013 there seems to be a steady stream of positive news from stock markets and money markets.
The main theme of this year has been the steady climb in the main stock market indices, and more importantly the fact that the climbs have been relatively smooth with very little disruptions or fall backs.
Some really positive news for investors is how the UK in particular is showing signs of a turnaround. For example, unemployment has stayed low and the numbers of people employed within the private sector greater than the public sector, although this includes part-time employment. However the private sector is the driving force behind a recovering economy.
Also the number of new business formations have increased significantly which can also be seen as a sign that people are looking ahead.
Despite our enthusiasm there are a number of major headline grabbing issues still around; European debt levels are still exceptionally high with very little economic growth or change, and America’s government continues to argue and barter over whether to increase their debt limit, which in turn has created the first US federal shutdown in 17 years.
Although the headlines may make these two subjects alone seem like financial Armageddon, there are many reasons not to be nervous.
Fundamentally markets recognise that Europe’s debt issues haven’t disappeared but equally they are no longer fearful of a collapse in the Euro currency. The European Central Bank seems to be doing its job of co-ordinating the efforts to manage the debt.
Equally in the US, markets are of a feeling that the politicians will continue to ‘horse trade’ over different issues but in reality none are prepared to suffer the effects of a US failure to raise their debt ceiling hence the situation will move on through the short and medium term.
Overall the news is positive for investors as I said. The prospects for equities in particular in the UK and globally is very favourable. At the same time the robustness of the markets looks to continue.
Autumn often sees a slight dip in markets before the climb as we enter winter, but we do not think this will be significant. Rather there is an anticipation that investments will continue their steady growth.
In light of the positive outlook we have made a slight but important change to our tactical strategy. Whilst we continue to have reservations on assets such as sovereign debt, such as gilts and gold, we are quite positive on other investment areas. Equities remain good value and offer good prospects hence we have increased these holdings slightly.
For our clients who hold investments, our focus always remains in the medium to long term. We feel confident that this outlook demonstrates itself in terms of steady growth.
As always, if you would like to discuss your investments in more detail or have any queries do not hesitate to contact us.