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Market Update January 2018

Our investment team look at how the markets performed in January
A Month In The Markets (February 2018)
Reading time: 3 mins

In January, some of the world’s leading nations reported their economic growth for the fourth quarter of 2017, using Gross Domestic Product (GDP), a yardstick commonly used to measure the health of a country’s economy. Despite Brexit, the UK economy grew more than expected, by 1.5%. Elsewhere, the US GDP grew by 2.6%, which looks impressive in the current climate but is below the 3% expected. Meanwhile, the Euro Zone’s growth was greater than both the UK and US, at 2.7%, matching expectations from a recent Bloomberg survey.

Stock Markets
Global stock and shares markets started the year in the same positive fashion as they ended  2017, with US, EU and Japanese markets producing strong returns. However, they weakened towards the end of January as investors speculated central banks would continue to tighten their purse strings, something that’s perceived as bad for stock markets.

Despite steady economic growth, the UK stock markets, affected by poor performances from large and medium sized companies, ended the month lower. Negative sentiment spread after some UK companies suggested the possibility of layoffs and periods of difficult trading in their most recent reports.

In currency markets, the Pound surged against most major currencies, rising +4.78% against the US Dollar, which itself has been struggling recently, due to continued political instability in the US.

Investment type performance breakdown
All investment types in our Plans produced negative returns for the first month of 2018: commodities -3.80%, private equity -0.79%, bond investments -0.73%, property -3.36% and shares -0.24%. *

Summary with plan details
January was a tough month for financial markets, as volatility rose to a level not seen since April 2017. As we highlighted in our Keep calm and carry on investing update, the turbulence we’ve seen in the global financial markets over the past week or so is simply the markets reacting to this run of good performance with what’s known as a ‘correction’, where prices of investments return to more realistic levels. We’ve used this opportunity to snap up some bargain investments for Adventurous, Ambitious, Confident and Tentative Plans, but we’ve left room to manoeuvre, in the event of further drops in price ahead. Through periods of market turbulence, keep calm, focus on your long-term goals, and stay invested.

*Figures shown are based on a medium-risk (Confident) investment Plan.

Your investments can go down as well as up and you could get back less than you put in.

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