The US’s ongoing ‘relationship issues’ with China, Turkey and Canada, accompanied by a continued lack of progress on Brexit discussions between the EU and UK all served to overshadow otherwise broadly encouraging global economic data in August.
In particular, comfort was taken from the US-Mexico trade deal agreement, and at the annual Jackson Hole meeting, US Federal Reserve Chair Jeremy Powell reassured everyone that their policy of gradual interest rate hikes remains appropriate for the US economy to continue posting positive growth – good news for global investors.
Back in the UK, as widely anticipated the Bank of England raised interest rates to 0.75% on 2nd August. This is predicted to be the last hike until the second half of 2019, despite UK unemployment reaching 4.0%, its lowest level since 1975.
Rising global trade tensions resulted in nervousness outside the US in August, however the US’s stock markets seemed unaffected, with shares rising +3.3%. In contrast, UK stock markets fell -3.3% fuelled also by rising concerns around a “no deal” Brexit. Although the UK’s departure from the EU is comparatively less of an issue for the wider single currency region, Eurozone shares nonetheless ended the month down -1.7%, in large part due to concerns around Italy’s newly-elected coalition seemingly struggling to balance the country’s books.
In corporate news, Coca-Cola announced it will buy Costa Coffee from UK company, Whitbread for £3.9bn. This pockets Whitbread a tidy profit on the £19m they paid for Costa in 1995.
The UK’s economic data was largely in line with expectations last month, but uncertainty continued to weigh on Sterling. The Pound fell -0.5% against the Euro and -1.27% against the US Dollar. In contrast, currencies that tend to benefit from market uncertainty, including the Swiss Franc and Japanese Yen gained 3.5% and 2.0% respectively against Sterling.
Investment type performance breakdown
Performance was mixed among investment types this month, with bonds down slightly (-0.06%) and shares (+0.27%) rising. Property (-2.74%) fell back, while commodities rose (+0.05%). Overall most investment plans saw little change by end of month.
Summary with Plan details
Our investment plans produced a mixed set of performance numbers this month. Cautious and Tentative models may have produced the most positive returns overall, whilst investment styles with more shares and property are likely to have ended the month in slightly negative performance.
As always, our investment team remain focused on keeping your investment plan on track and will be ready to act as opportunities arise.
In August we launched five Ethical Investment Plans. Why not find out more about them here.
Figures shown are based on a medium-risk (Confident) standard investment Plan.