Expert Opinion: Prest review mid-year markets

Stockport based Prest Financial Planning believe that there is no doubt 2018 has thrown up some intriguing scenarios for global markets.

Here, at the mid-point, Prest financial planners Mike Walker & Steve Monk reflect on the year thus far:

If we cast our minds back to January we were in the midst of a global market sell-off. A short-term sell-off such as this can cause panic selling within markets which in turn creates a domino effect caused by a lack of confidence.

This scenario is, nevertheless, preferable to a sell-off based on “fundamentals” – that is to say, the balance sheets/company accounts underpinning individual shares, or hard statistical evidence compiled by analysts or researchers on future economic performance. By mid-March January’s losses had been reversed.

While the fundamentals of the global economy remain robust, global growth is continuing due in part to the progress that has been made around the world to rebuild economies following the credit crisis.

It appears likely that economic growth will continue at around current levels for the time being and not put undue upward pressure on interest rates.

Corporate earnings growth continues to be resilient, as does global growth generally. However, this is against a backdrop of increased volatility due to the risk of a potential trade war, which continues to worry investors.

At the start of the year the concern was that global growth was becoming less synchronised, with the US decoupling from the rest of the world and concerns that US interest rates would increase strongly as their economy improves. Despite this threat, it appears likely that economic growth will continue at around current levels for the time being and not put undue upward pressure on interest rates.

In summary, our expectation is that we will continue to see modest investment returns for the rest of the year, albeit in a political and economic environment that could produce a bumpier ride. Here at Prest we continue to monitor global financial markets and make changes to our client portfolios accordingly.

This article is intended purely for information purposes and should not be regarded as an offer or solicitation to conduct investment business. The value of investments, and any income derived from them, can fall as well as rise and investors may not get back the full amount they have invested.

Expert Opinion contributed by Prest Financial Planning