After the heady gains in January, financial markets have had a modest correction.
For most investors they have seen their portfolios fall back to where they were in September to October last year. Yet there are already signs that valuations are making a comeback.
As the past three months have progressed we’ve seen financial markets and institutional investors move slightly away from momentum trends, and more towards traditional value investing.
This is a welcome change as it means the market settles to a more natural level moving in line with reasonably predictable economic trends and fiscal policy, rather than knee jerk panic reactions.
A good example is the fear of import tariffs and a trade war which initially created jitters, but as details emerged the tariffs were not quite as all-encompassing as markets were led to believe.
Unfortunately, due to the current political scene and theatrics there is a possibility that future announcements could easily create more jitters. But on a positive note financial markets are becoming more resilient to these announcements and are soon able to reassert themselves.
Looking ahead elsewhere, there are positive signs that Global and UK growth have returned. The Governor of the Bank of England, Mark Carney, has effectively said that there will also be interest rate rises alongside the burgeoning growth but these rate rises won’t be overly severe as wage growth still has some space to grow.
This can be seen as a sign of confidence in the economy and the hope is investors can hopefully look forward to steady returns, if not particularly aggressive returns.
This expectation will hopefully be fulfilled across all asset classes and geographies, from property and fixed interest to equites in the UK and around the globe.
As is often the case, for investors holding a varied and well distributed portfolio we will hopefully see steady growth even allowing for any short-term blips in the main indices.
As with previous market updates, we encourage our clients to keep in touch.
Contact us should you have any queries or worries. Our team are always happy to have a chat. Whether it is a review driven by concerns in financial markets, a change in legislation or simply an alteration in your situation or priorities, please contact us.