For this week's Omnis Investment Perspective, we look at why interest rates are rising, why this would risk moving the UK into recession and what this could mean for investment portfolios. We hope this piece provides some clarity around the economic headwinds whilst also seeking to assure you that sticking to your plan is what matters in the long term (without underplaying the short-term challenges of course).
It was another volatile week in markets, with mixed results at the end. The focus remains on how central banks plan on taming inflation and the impact this could have as economic growth around the world continues to slow. In the US, whilst inflation has fallen, it has fallen by less than economists expected. In the UK, the economy shrank in the month of May.
In another volatile week in markets, the focus remains on how central banks plan on taming inflation and the impact this could have as economic growth around the world continues to slow. Last week, both the US and UK central banks raised its interest rates. China’s zero-tolerance to Covid shows signs of impact on the Chinese economy, and the associated supply chain disruptions are having repercussions globally.
The global economy could be flying into a perfect storm: certainly, clouds are gathering on horizons in Europe, China and the US. After a strong bounce back from the pandemic in 2021, the pace of economic growth was always going to slow. However, a combination of inflation, war in Ukraine, ongoing Covid lockdowns in China and more assertive central banks risks are accelerating the global economic slowdown. Read more in our monthly update.
Markets experienced ups and downs in April as economic forecasts pointed to slowing growth and ongoing measures to tackle inflation.
The geopolitical and macroeconomic concerns that have loomed large over sentiment in recent weeks remained in place. Japan’s central bank diverges from other central banks, with the Federal Reserve and Bank of England expected to raise interest rates this week. Corporate earnings impacted markets, with Amazon weighing on US markets, whereas European corporate results helped soften the losses amidst a challenging macroeconomic backdrop.
It was a challenging week for markets across the world with many different factors affecting sentiment. Covid-related lockdowns in China has led investors to worry about the economic fallout China and supply chain consequences globally. In Europe, Macron’s victory provides some continuity in France and in the UK, the latest economic data reinforced a picture of stuttering economic growth.
To celebrate World Earth Day and support the 'Invest in our planet' theme, we are pleased to share a couple of success stories from a selection of our Omnis Investment management partners; Barings Asset Management, Federated Hermes, AXA Investment Managers, Jupiter, Western Asset Managers and Fulcrum. The climate change showcase slideshow below shares how each manager is pushing their portfolio companies to combat climate change, or making important changes within their own businesses.
Bond holders have endured a challenging start to the year as fears of inflation and rising interest rates have pushed bond prices lower. However, there are signs that we may be at a turning point, and we believe high quality bonds continue to deserve their place in diversified portfolios.
In a holiday-shortened week, markets were mixed across the world, with inflation concerns very much at the forefront in most markets. Inflation in the UK and the US has continued to rise with many expecting the Bank of England will raise interest rates again in May. Covid-related lockdowns in Shanghai, China has fuelled supply chain concerns further. Japan’s central bank continues to remain supportive of the economy and in Europe, the central bank says they have no timelines for raising interest rates.
It continues to be a somewhat uncertain time for markets as fears over higher inflation and Russia’s invasion of Ukraine dominate, whilst at the same time much of the world continues to transition towards slowly learning to live with COVID-19.
Rohit Vaswani, Client Portfolio Manager shares the monthly video update for the Omnis Managed Portfolio Service. We hope you find this video helpful, and if you do have any questions, please speak to your financial adviser. Thank you for watching.