market insight

Market round-up: 8 – 12 April 2019

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The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding in April 2019.


In a week that saw global markets have their fair share of both tricks and treats, European Union leaders also agreed a new Brexit deadline, October 31st, Halloween.

On Thursday’s news that a no deal Brexit has effectively been averted for the time being, more domestically orientated mid-caps led the way with housebuilders and retailers topping the charts. Sterling remained largely unchanged throughout the week, staying around the $1.31 mark despite a flood of positive economic data for analysts to pore over.


Economic activity

Whilst the broadest measure of economic activity, GDP, was in line with expectations, Manufacturing Production took the spotlight, growing 0.9% versus consensus estimates of 0.2%. Measuring the total change in the value of output produced by manufacturers, the data is very important to the UK economy, especially as manufacturing makes up c.80% of total industrial production and tends to dominate its numbers. The numbers really matter as manufacturing acts as a leading economic indicator as production tends to react quickly to the ebbs and flows of the business cycle and is heavily correlated to consumer conditions such as employment levels and earnings.


Another one bites the dust

Such positivity was short lived however as a slowing high street claimed its latest victim. Debenhams, the retail stalwart that has dominated the high streets of Britain for generations is the latest name to slide into administration. Now in the hands of its lenders, the retailer must wait for any potential suitors to come forward, having tried its hardest to rebuff retail tycoon, Mike Ashley’s advances.


US/China trade tensions

The slowdown in UK retail was not the only unwanted theme of 2018 to resurface this week.  As trade tensions between the US and China have appeared to ease in recent months, the spectre of tariffs reared its head once again. The Trump administration’s proposal to levy $11bn worth of tariffs on EU products escalated this week as commentators wagered that the controversial US President would turn his attention to Europe next. The list of possible tariffs presented by the US cover a wide range of goods, from aerospace technology to fine cheese and wine.


JP Morgan Q1 results

The end of the week saw earnings season kick off in the US with banking heavyweights JPMorgan and Wells Fargo first to announce their performance over the first quarter of 2019 on Friday afternoon. JPMorgan posted record first-quarter profit and revenues that beat expectations, boosting the share price. The results help outline the strength of the underlying US consumer and economy in general.


International Monetary Fund (IMF)

After a weekend that sees the IMF convene in Washington DC, the tone for the upcoming week could be set as early as Sunday. Held only twice a year, the summit will be attended by the representatives from the World Bank and includes various press conferences throughout the weekend. Comments from such high ranking and influential officials can cause waves in financial markets as the day’s major economic challenges and opportunities are discussed.


Domestic house prices

On the domestic front, the beginning of the week also sees Rightmove release their House Price Index numbers, detailing the change in the asking price for homes for sale in the UK. Although the data only has a mild impact as asking prices and selling prices can become decoupled, it does act as a leading indicator of the housing industry’s health. Rising house prices often have a knock-on impact on the wider property sector such as housebuilders and estate agents.


UK average earnings data

More domestic data released on Tuesday will help us get a clearer picture of how the UK’s economy is faring as Average Earnings data for the last quarter is released. It rarely feels like it but wage growth is now outstripping inflation meaning that in real terms, the UK consumer has more disposable income to spend, a welcome indicator for the beleaguered high street. We will only have to wait until the following day for the Office for National Statistics to release inflation data, giving us a more comprehensive view of how the economy is performing.


Good Friday

The week is truncated somewhat with European markets closing in observation of  Good Friday.  The US, however, will stay open with the American Census Bureau releasing Building Permit numbers. The data will provide us with useful gauge of future construction activity as obtaining a permit is one of the first steps of constructing a new building.


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