Beyond the Headlines: A Positive Global Outlook
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
What’s going on?
Earlier this week data emanating from the UK laid the foundation of positive economic fundamentals in regard to the labour market. The Office for National Statistics or ONS, outlined that employment rose by a further 35,000 positions from the month prior. This drops the overall unemployment figure at 1.34 million or 3.9%, the lowest for over 4 decades. Compounding this, the inflation rate grew closer to the Bank of England’s target of 2%, rising from 1.8 to 1.9%. Average wage growth remained at 3.4%, meaning that despite this inflationary uptick real wage growth continues to be positive.
Outside of the UK, positive news also stemmed from the US in which the CBOE’s VIX index, this being a gauge of short-term US stock market volatility, fell to a 5-month low of 12.37. This represents a dramatic climbdown from its peak of 36.2 that was reached amid the global sell-off in December.
How does this affect you?
With uncertainty around Brexit still dominating the headlines, the positive economic data stemming from the labour market has given investors more reason to remain constructive on the UK. Following the announcement from the ONS, the FTSE 100 was up 8.84% Year-to-Date. Moreover, whilst wage growth continues to outstrip inflation, we should see a further increase in consumer spending, ultimately aiding UK GDP Growth.
With the S&P 500 currently making returns of 12.66% Year to date, US stock markets have already made gains past the losses they incurred in Decembers sell-off. The recent figure presented by the VIX index should quell any remaining nervousness investors had around the US markets, leading to greater investment in-flows and confidence within this region.
What happens next?
Despite May’s request for a short-extension to Brexit, our official departure from the European Union remains set for the 29th of March 2019. Regardless of this encroaching withdrawal, the UK has strong supporting economic fundamentals to fall back on as we head further through 2019.
In addition to the VIX figure reduction, the most recent announcement from the US Central Bank indicates that there will be no Interest Rate hikes this year. With rate rises last year seriously hindering markets, this could dispel nervousness even further, culminating in a continuation of strong US market performance.
Ultimately, as we head in to the second quarter of 2019, there are still a plethora of reasons to remain positive on the global outlook.