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D-PIMS Weekly Market Update - Week of 27th January to 2nd February 2020

Today’s Monday Update:

There were a number of events over the last week, but the headlines all week were dominated by the escalating Coronavirus crisis:

• Markets started the week in a nervous mood on Monday, after seeing increasingly widespread actions being taken in trying to contain the Coronavirus. This was due to fears that the greater
curbs on travel and business interruption could start to drag on the Global Economy.

• In President Donald Trump’s Senate impeachment trial on Tuesday, his legal team wrapped up its opening arguments with an appeal for a quick acquittal. Saying “it is time for this to end”. The Republican-controlled Senate is almost certain to acquit Trump.

• On Wednesday the European Parliament in Brussels voted to ratify the terms of Britain's divorce deal from the EU, which was its final hurdle. The historic legislative act (the last for the 72 remaining British MEPs who left afterwards) allowed Brexit to officially take effect on Friday at 23.00 GMT, midnight for most of continental Europe and 11:00 pm in Britain.

Also that day, property industry figures were released, that showed British house prices rose in January at their fastest annual rate since November 2018, adding to signs of improvement in the housing market and broader economic confidence since December’s election.

Nationwide Building Society said annual house price growth in January increased to 1.9% from December’s 1.4%, above all forecasts in a Reuters poll of economists, in what it called a “modest pickup”.

In the US, the Federal Reserve kept its key interest rate unchanged at up to 1.75% and continued to signal policy would stay on hold for the time being, but they did stress the importance of lifting inflation to the 2% target.

• Thursday saw The Bank of England do like-wise when they also kept interest rates on hold at its rate setting meeting, as it sees signs of a post-election pickup in the UK Economy. Sterling strengthened on the news, as it defied money markets expectations which had been pricing a 50% chance of a rate cut to help boost the UK Economy.

Euro zone economic sentiment jumped as confidence among manufacturers rose while unemployment was at its lowest level in more than a decade, data showed on Thursday. The improvement was driven by higher confidence in industry, as factory managers were more upbeat on their production expectations and their stocks of finished products. The sector was hit hard last year by global trade wars and seems to have benefited from an initial trade deal between the United States and China signed in mid-January.

• Friday – Britain finally left the EU after three and a half years of wrangling and several missed deadlines. As it was by then a known event, Markets ignored it, even the Pound didn’t seem bothered, for once!

• Over the week, the almost constant stream of news around the Coronavirus did drag on Global Stockmarkets, as fears increased that its spread will impact some companies ability to trade. Therefore all Global indexes were down over the week, particularly the Far Eastern ones.

The D-PIMS Portfolios were unavoidably affected, although they fared relatively well compared to Markets, especially the lower risk Portfolios.

 

The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.


Past Performance is no guarantee of, or guide to future returns.


The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.

 

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