April ended on a positive note for equity investors, however, because of a disappointing January and March, 2014 has so far not generated meaningful positive returns for most investors, when compared to the same period last year. In our 2014 outlook last December, we did advise that this was possible to happen after equity markets stormed ahead in late 2013. This was in anticipation of what was to come in terms of more positive economic news in 2014.
As it happened the first quarter's economic progress turned out to be positive, but less than anticipated in the US (because of cold weather) and in China (because of credit market overheating) than anticipated. Given these two had been the Global growth engines of late, the limited progress in the stock markets seems a sign of prudent investor behavior. This gives us comfort that capital markets are not overheating as some of the permanently bearish commentators have been suggesting.
Low risk assets like government and corporate bonds have generated the highest returns so far this year. This seems counter intuitive against the backdrop of a worldwide improving economic picture which normally drives up yields and thereby reduces bond values. It can be explained as a temporary counter movement after last year's significant declines in bond values and resurgent concerns over geopolitical stability caused by the Ukraine crisis. Since the middle of March we have seen broad confirmation of the sustainability of the recovery, with a broad range of forward looking indicators turning positive, once more.
This has re-established 2013's general market environment, whereby investors are now awaiting the better economic environment, to feed through into company earnings. At the moment it is too early to see a feed through yet and so market participants are eagerly observing companies' outlook statements for any hints
During the past week equity markets continued their strong upwards movement and came close to previous highs. This was not on the back of strong company results which were positive but uninspiring, but rather a general positive sentiment swing. The surprisingly good US employment growth figures and the continued mergers and acquisitions announcements helped to persuade more investors that the likely way for the economy over the coming months is up, not sideways as in the first quarter
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As it happened the first quarter's economic progress turned out to be positive, but less than anticipated in the US (because of cold weather) and in China (because of credit market overheating) than anticipated. Given these two had been the Global growth engines of late, the limited progress in the stock markets seems a sign of prudent investor behavior. This gives us comfort that capital markets are not overheating as some of the permanently bearish commentators have been suggesting.
Low risk assets like government and corporate bonds have generated the highest returns so far this year. This seems counter intuitive against the backdrop of a worldwide improving economic picture which normally drives up yields and thereby reduces bond values. It can be explained as a temporary counter movement after last year's significant declines in bond values and resurgent concerns over geopolitical stability caused by the Ukraine crisis. Since the middle of March we have seen broad confirmation of the sustainability of the recovery, with a broad range of forward looking indicators turning positive, once more.
This has re-established 2013's general market environment, whereby investors are now awaiting the better economic environment, to feed through into company earnings. At the moment it is too early to see a feed through yet and so market participants are eagerly observing companies' outlook statements for any hints
During the past week equity markets continued their strong upwards movement and came close to previous highs. This was not on the back of strong company results which were positive but uninspiring, but rather a general positive sentiment swing. The surprisingly good US employment growth figures and the continued mergers and acquisitions announcements helped to persuade more investors that the likely way for the economy over the coming months is up, not sideways as in the first quarter
visit kassius annuities for more stories
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