Weekly Digest – INVESTEC

Click here to read the Weekly Digest, with comments on recent market movements.

With the unwelcome distraction of the market volatility over the last few weeks, it has been easy to overlook that the world goes on away from Wall Street and we are entering a busy couple of weeks from a political point of view. Over the weekend, we had fresh regional elections in Germany, with the results in Hesse dealing another blow to Angela Merkel’s fragile coalition government. The UK Budget has just finished, whilst a week tomorrow sees the US mid-term elections.

It is another busy week of corporate news, with BP, Reckitt Benckiser, GE, Coca-Cola, SMCP and Facebook updating on Tuesday, Next, Standard Chartered and Glaxo on Wednesday and Shell, Shire and Apple on Thursday amongst the companies reporting.

In terms of our portfolio management of your/your clients’ portfolios, we view recent falls as a short-term correction rather than the beginning of a damaging bear market and there is little to suggest that a global recession is in the making either in the US or globally.  In our opinion, the key risk to this current outlook is a major escalation of the trade war between US and China (maybe a little more posturing to come ahead of the mid-term elections).  With this in mind, we are considering opportunities within portfolios, where appropriate, having taken some profits and having added to more defensive assets such as bonds and alternative assets.  We do, however, envisage continued volatility, notably around the US mid-term elections and the ongoing budget negotiations in Italy.