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Economic Market Update

Economic Market Update Sep 2017

Typically investment markets tend to be fairly quiet during August as both investors and investment professionals switch their attention to holidays. However, even markets remain responsive to external world events.

During this August a number of political and natural disasters have taken centre stage. Barcelona witnessed another horrific terrorist atrocity, whilst the war of words in terms of the combative rhetoric from North Korea escalated to the firing of a missile over Japan, and the escalation of diplomatic pressure and talk of increasing sanctions.

In terms of the impact on markets initially there was an increased demand for so called ‘safe-haven assets’. An example of this was the surge in gold prices to an eleven month high which saw it reach its highest level since President Trump’s election in November 2016.

Elsewhere, tropical storm Harvey hammered Texas and the US Gulf Coast. In addition to the human cost of the disaster, investors were assessing the potential impact on short-term economic growth. Oil production and refining activity was disrupted during the storm, driving up the oil price, whilst America has witnessed infrastructure damage in the areas most affected.

In the US, President Trump’s relationship with the US business community deteriorated further during August as high-profile company leaders deserted his Manufacturing Council in the wake of unrest in Charlottesville, Virginia. Notwithstanding these issues, the US economy expanded at an annualised rate of 3% during the second quarter of 2017, compared with an earlier growth estimate of 2.6%. Overall the Dow Jones Industrial Average Index edged 0.3% higher over August as a whole.

Back nearer home uncertainties surrounding Brexit are continuing to hamper the UK’s economic growth, business investment, and wage growth, according to the Governor of the Bank of England Mark Carney. Meanwhile, at the latest round of Brexit negotiations, EU Brexit negotiator Michel Barnier complained of a lack of “decisive progress”. Despite this the FTSE 100 Index rose by 0.8% during August. Consumer demand continues to underpin the economy.

Faced with the ongoing low interest rates available on pure cash based accounts, many people are exploring ways in which investments can be structured tax efficiently but with the potential to create a more competitive and sustainable return and markets offer the potential to achieve this, albeit investors need to consider the risks involved.

If you would like to learn more about the investment opportunities available to you please contact Shaun Bell or Stuart Read at Sabre Financial on 01548 856444 or via e-mail at shaun@sabrefinancial.co.uk or stuart@sabrefinancial.co.uk .

 

 

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