Market Commentary 1st April 2019 from Edward Cameron

Ocado’s share price rose more than 9%, to reach all-time highs, following news that it has signed an agreement with Australian supermarket Coles to develop its online business. Conversely, cruise group, Carnival, dropped 9% after it released a disappointing profit forecast.

European markets were buoyed by the news of progress in the US/China trade talks and were further improved as Mario Draghi, President of the ECB, reaffirmed the position that the bank would not raise interest rates in 2019. With an expectation that borrowing would remain lower for longer, investor optimism improved.

Bond yields stabilised last week, following falls in the previous week and this helped ease investor fears over an economic slowdown. Further positive news came as diplomats met in Beijing for a further round of talks with the White House suggesting they could lift some of the tariffs currently imposed on China. Talks continue this week in Washington, with hope that the two countries can reach an agreement on the issue of “forced tech transfer”, a key sticking point in negotiations. “Forced tech transfer” is the Chinese policy of forcing foreign companies to partner with local companies, in order to gain access to the market, and then using this partnership to copy products and patents, ultimately creating their own products and undercutting the foreign company.

US GDP grew by 2.2% in the 4^th Quarter of 2018, which whilst lower than estimates, still meant annual growth of 2.9%, which was higher than in 2017.

There is still some concern over the Chinese economy, with industrial output growth slowing and a weakening in export growth. Due to the area’s proximity to China, Asian markets are most affected by news concerning China and as such remains a volatile market.

With the yield on 3 month and 10-year Treasury notes inverting in the previous week for the first time in 10 years, there is still ongoing concerns surrounding a global slowdown.

GBP / EUR – Current 1.1620 Previous 1.1694

Sterling fell by approximately 1.4% against the Dollar and 0.6% against the Euro. Sterling had a poor week, following the inability of Theresa May to pass any of the 8 Brexit alternatives she presented to MPs. With the original 29^th March Brexit deadline passing without the UK leaving the EU, there is still great uncertainty as to how and when the UK will leave. With options ranging from leaving without a deal, negotiating a customs union, cancelling Brexit and holding a second referendum, in addition to various extensions to the Article 50 deadline depending on the option chosen, there is much confusion and uncertainty.