Equity markets have once again proved their resilience this week as tensions in the Ukraine flared up again on the news of a number of clashes involving pro-Russian and pro-Ukrainian forces. These events however, did not completely overshadow the positive economic news flowing out of the US and the UK, the two best performing economies in the world today.
Stock indices in the UK have remained largely range-bound. Over in the US, both the large cap-focused Dow Industrial and the broader S &P 500 saw solid gains on the back of some fairly decent corporate earnings reports, particularly within the healthcare sector, and some strong consumer spending data. The Dow bounced off key technical support levels early in the week to rally nearly 400 points – or 2.5% - later on as investors took some positive signals from the release of the latest US Beige Book. Overall, the core assessment of the economic conditions of the US were quite bullish, noting that growth 'increased in most regions' and that the labour market was 'generally positive'.
Retail sales across the US appear to be recovering, particularly in hardest-hit New York as weather conditions improved and consumers returned to stores. As we head towards the summer, we would expect that further progress looks likely given the solid rebound in the jobs market
The UK economic recovery reached another milestone this week on news that wage growth has now caught up with the rate of inflation and it appears increasingly likely that income growth could outpace the rise in prices in the near-term. We think that this could help provide a further boost to consumer sentiment, as people feel wealthier. This could therefore have a positive effect on spending patterns.
The Chinese also provided investors with more good news. China revealed that its quarterly GDP number beat expectations, which now extends their continuous run of market exceeding growth to over 10-years. There were some slight negatives within the data, suggesting a slightly softer patch of economic growth may be on the horizon. We would like to note that China is currently engaged in wholesale measures aimed at cleaning up its financial system and removing any systemic threats that could crimp its growth. We feel that investors should be mindful of those risks but that they should also remember Chinese leaders have rarely put a foot wrong in dealing with these threats and we believe rates of GDP growth of over 7% whilst simultaneously de-risking its financial system is mightily impressive.
The flaring up of tensions in the Ukraine acted as something akin to a dark cloud hanging over markets and by all accounts, the situation is serious and dangerously fragile. What do we think are the global economic and asset implications? We view these impacts as likely being more local than global. Despite the large size of Russia's economy, it has relatively limited integration with the world economy outside of supplying energy and natural resources, which could suggest that the global economic and asset implications, even for Europe, could remain limited. The impact on Russia itself could be somewhat larger, which enjoyed a generally promising outlook for 2014. Its fortunes may have already been temporarily derailed and financial assets have underperformed. The worst-case scenario, which includes a disruption in oil and natural gas deliveries, could potentially cause more economic and asset damage, but we feel it is likely that oil prices could fall rather than rise, suggesting that such a scenario could actually prove to be deflationary.
Overall, we see very little that would cause us to alter our investment views, even our longer-term positive stance on Russian equities. We remain happy with our current market positioning and we still see a very positive global growth story unfolding, particularly in light of the improvements seen in the US and British economies.
More stories at: kassius annuitiies
Stock indices in the UK have remained largely range-bound. Over in the US, both the large cap-focused Dow Industrial and the broader S &P 500 saw solid gains on the back of some fairly decent corporate earnings reports, particularly within the healthcare sector, and some strong consumer spending data. The Dow bounced off key technical support levels early in the week to rally nearly 400 points – or 2.5% - later on as investors took some positive signals from the release of the latest US Beige Book. Overall, the core assessment of the economic conditions of the US were quite bullish, noting that growth 'increased in most regions' and that the labour market was 'generally positive'.
Retail sales across the US appear to be recovering, particularly in hardest-hit New York as weather conditions improved and consumers returned to stores. As we head towards the summer, we would expect that further progress looks likely given the solid rebound in the jobs market
The UK economic recovery reached another milestone this week on news that wage growth has now caught up with the rate of inflation and it appears increasingly likely that income growth could outpace the rise in prices in the near-term. We think that this could help provide a further boost to consumer sentiment, as people feel wealthier. This could therefore have a positive effect on spending patterns.
The Chinese also provided investors with more good news. China revealed that its quarterly GDP number beat expectations, which now extends their continuous run of market exceeding growth to over 10-years. There were some slight negatives within the data, suggesting a slightly softer patch of economic growth may be on the horizon. We would like to note that China is currently engaged in wholesale measures aimed at cleaning up its financial system and removing any systemic threats that could crimp its growth. We feel that investors should be mindful of those risks but that they should also remember Chinese leaders have rarely put a foot wrong in dealing with these threats and we believe rates of GDP growth of over 7% whilst simultaneously de-risking its financial system is mightily impressive.
The flaring up of tensions in the Ukraine acted as something akin to a dark cloud hanging over markets and by all accounts, the situation is serious and dangerously fragile. What do we think are the global economic and asset implications? We view these impacts as likely being more local than global. Despite the large size of Russia's economy, it has relatively limited integration with the world economy outside of supplying energy and natural resources, which could suggest that the global economic and asset implications, even for Europe, could remain limited. The impact on Russia itself could be somewhat larger, which enjoyed a generally promising outlook for 2014. Its fortunes may have already been temporarily derailed and financial assets have underperformed. The worst-case scenario, which includes a disruption in oil and natural gas deliveries, could potentially cause more economic and asset damage, but we feel it is likely that oil prices could fall rather than rise, suggesting that such a scenario could actually prove to be deflationary.
Overall, we see very little that would cause us to alter our investment views, even our longer-term positive stance on Russian equities. We remain happy with our current market positioning and we still see a very positive global growth story unfolding, particularly in light of the improvements seen in the US and British economies.
More stories at: kassius annuitiies
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