Gareth Says – Difficult Markets
The FTSE has been the best major world market this year, down 4.1% at the time of writing, 17/06/22. The European markets are down 17.9%, Japan down 11.5%, Pacific down 6.2%, Emerging Markets down 5.1%, America S&P down 23.3%, Tech index down 32% and the World Index down 21.1%.
The difficulty with markets and performance is that America dominates most funds, even UK funds have on American influence with many stocks, such as Glaxo, Astra Zeneca, Unilever, BP, Rio Tinto earning a high percentage of their profits from America so it does influence their performance.
Interesting Statistics:
- The S&P (US Index) fell more than 13% between January and April that is the worst start to the market since 1939*.
- If you had a crystal ball and could have picked the best place to be invested each quarter since 1980, £100,000 would be worth £4.8 billion **.
- In the first quarter this year the best sector was down 4.5%!
*Source CNN Business
**Source Ruffer
Why
It isn’t too difficult to ascertain, a destabilizing war, which could escalate. Inflation rising across most World Markets and stagflation (which is where inflation is greater than growth and unemployment is high) all weigh heavily on markets. The UK has fared better because our index is mainly made up of pharmaceutical, mines, oil and banks with little technology, unlike most other markets.
What is the outlook?
A couple of sayings:
“stocks climb a wall of worry” meaning stocks will often rise as the market looks forward to rosier times.
“Sell in May and go away” hasn’t been true for the last few years and we hope not this year.
In the previous five worst starts in America to a year ever, we saw the remainder of the year higher in every case. The average was up 19.1%. Let’s hope so.
The M&T DFM funds, in conjunction with LGT have a high proportion of their monies in cash and are awaiting opportunities which I feel are just around the corner.
Gareth.
