23rd April – 28th April 2019

Front and centre of our thoughts this week include

A holiday-shortened week for most of Europe with the Easter break impacting market schedules. Wall Street was open yesterday but average trading volumes were significantly lower than normal. Despite the back-to-school feel for many this morning the release of economic data this week is quite sparse, indeed the corporate earnings calendar is likely to be a key driver of market sentiment. Central bank meetings may grab a few headlines however the return to government for many of the world’s leaders will set the media agenda for the week which we begin with below.  

Japanese PM Shinzo Abe travels to Washington this week, via Europe. Naturally trade talks sit high on the agenda not least when it comes to the US. Media reports suggest that Russian President Valdimir Putin is due to meet North Korean leader Kim Jong Un at a summit on Wednesday before holding talks later in the week with Chinese Premier Xi Jinping. Expect to hear a little more on the fallout in Ukraine after comedian turned politician, Volodymyr Zelensky, became President in the weekend elections, while the latest phase of India’s general election also takes place on Thursday.  

The US corporate earnings calendar is dominated by the big tech companies this week with eBay, Twitter, Microsoft and behemoth Amazon all reporting. The tech index, known as the NASDAQ, is close to its record high so we shall see if the index can continue to trade up at these levels following their results. Another titan of US industry, Boeing, reports this week with lower profit and sales expected from the world’s largest aircraft maker. Analysts will be looking for guidance on how the company expects demand to react following two fatal accidents involving its 737 Max jets. Finally keep an eye out for European bank earnings, the industry is under-going deep structural change while low interest rates in the Euro area are limiting their ability to generate robust profits. 

The Bank of Japan hold their monetary policy meeting this week and whilst no change is expected, we will see the latest quarterly report which provides insight into their views on longer-term economic growth. Similarly the Bank of Canada is expected to hold monetary policy at its current stance following recent interest rate rises, with their quarterly report also being published. Both the central banks of Sweden and Russia meet this week with neither expected to change policy.

‎Finally, as noted, there is not much in the way of economic data this week. There is consumer confidence data out of the Eurozone this afternoon, which is followed by German business confidence data tomorrow morning which is forecast to be higher. Much of the important US data is released towards the end of the week where durable goods orders for March are expected to show a small rise before we see the first estimate of Q1 US GDP on Friday. This data point is expected to be weaker as the federal government shutdown in January is likely to have dragged down growth.

Going on in the engine of Brexit

The politicians are back from their Easter recess which suggests a small flurry of Brexit-related headlines should break across the news desk. Expect to hear stories about PM Teresa May’s leadership and the apparent lack of confidence from various parts of both her backbench, cabinet and opposition MPs. 

However with Brexit pushed out to October, for now, we would expect the noise to die down a little. The next stage to getting a deal through lies principally with the current set of talks between the Conservatives and opposition Labour party. Whilst those talks haven’t been particularly swift thus far, they should remain the focal point in the eyes of the media.

In the rear view mirror of last week we saw

Last week saw a flurry of inflation data released, with little movement being observed in the UK or the Eurozone. Inflation remains soft in Europe and continues to be a chief worry for the European Central Bank. The headline reading for March released last week (which is a year-on-year figure) fell from 1.5% to 1.4% however the early Easter in 2018 bore much of the blame. This is because of the higher prices for services (transport, accommodation and recreation) that typically creeps into the inflation numbers.

Data in the Eurozone was a continual disappointment last week with the purchasing manager indices (a measure of private sector activity in the region) showing that the economy slipped in first quarter of this year. The weakness was driven by both the services and manufacturing sectors. While German and French service data displayed some robustness, the overall message is one of an economy that is going through a notable weak patch, unable to rebound from the weakness experienced in 2018.

In the side view mirrors of corporate activity we notice

The IPO market for tech start-ups in the US goes from strength to strength with social media company Pinterest undertaking their stock market debut last week. On the same day Zoom Video Communications also listed with the share prices of both companies rising significantly after the first day. Both companies will be trying to avoid the fate of ride-hailing company Lyft, a tech IPO in March, where the share prices have fallen 19% since it floated.

Source: Bloomberg. Figures are for the period 15th April to 19th April 2019.
Where the index is in a foreign currency, we have provided the local currency return.

The above chart provides the performance for the three developed market geographies where the TMWM MPS portfolios maintain their largest exposure. All investments and indexes can go down as well as up. Past performance is not a reliable indicator of future performance.

Opinions, interpretations and conclusions expressed in this document represent our judgement as of this date and are subject to change. Furthermore, the content is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or a solicitation to buy or sell any securities or to adopt any investment strategy. This note has been issued by Thomas Miller Wealth Management Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Register Number 594155). It is a company registered in England, number 08284862.

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The value of your investment can go down as well as up, and you can get back less than you originally invested. Past performance or any yields quoted should not be considered reliable indicators of future returns. Prevailing tax rates and relief are dependent on individual circumstances and are subject to change.

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