QTR 1 2017
2016 provided substantial acceleration for financial assets which paved the way for the first quarter performance. As a result of the US election the immediate market reaction was an outperformance in cyclical stocks and commodities. This continued to boost expectations for growth in the U.S. The market performance has continued with economic expansion in the US, a resurgence of growth in China and global industrial output. Indian equity has been showing stellar growth.
Bond markets saw modest gains in fixed income funds after a bumpy fourth quarter in 2016. Riskier bonds in emerging markets and emerging markets local currency bonds outperformed. Corporate bonds
In the U.S in particular, energy and manufacturing sectors rallied and financials tagged along for the ride. Healthcare is still however lagging but this is in the main due to the uncertain regulatory environment.
Unless you have been living on a desert island, Article 50 has been triggered. Brexit is actioned and with full regimental performance GBP fell with the announcement but a rally shortly ensued. With so much of the moves priced in the markets adjusted quickly. The negotiations will start next month. Watch this space.
We have the French elections this month and whilst we don’t expect any shock wins, we should not forget that everyone said that about Trump and the UK referendum. However we can draw some takeaways from the Dutch elections; Far right populism was contained and the far left party grew.
Politics dominated the news over the first quarter with much expectation and rhetoric around populism and change. However, equity markets produced strong results.
There has been much focus on the UK and the Eurozone for the past couple of weeks but with concerns in North Korea and Syria the uncertainly and caution will continue and investors will seek safe havens.