After taking a breather in the previous week, markets returned to its losing streak, with pessimism centred around economic growth deteriorating and the impact that the actions of central banks around the world could have on tipping economies into a recession. Markets continue to be challenging, and we will of course keep you updated on our latest thoughts and give you our best assessment of what is going on in markets. You can access Omnis’ latest views at www.omnisinvestments.com

US: The worst first half of a year since 1970

Worries grow that the Federal Reserve’s fight against inflation would push the economy into recession. These ongoing fears has meant that the S&P 500 index, had the worst first-half of a year since 1970. Economic data published during the week was poor. Consumer confidence, manufacturing, personal consumption all indicated overall pessimism in the economy.

Japan: Services sector confidence up, but manufacturing down

The escalating risk of a global recession prompted by major central banks aggressively raising interest rates to combat inflation continued to worry investors. Japan’s large manufacturers are increasingly concerned about the global economy and the impact that China’s covid lockdowns could have on supply chains. On the other hand, confidence among services sector firms, which benefited from the lifting of domestic coronavirus restrictions, improved.

China: Infections falling prompts activity to pick up

Stocks advanced on the back of strong factory data and easing covid restrictions for travellers. China has halved the quarantine times for inbound travellers to 10 days, which signals a shift in China’s previously rigid approach to restrictions and quarantine. In economic readings, manufacturing and services sectors both appear to have grown in June as a drop in new omicron infections allowed the government to ease restrictions.

Europe: Inflation continues to soar

Shares in Europe fell on fears that soaring inflation and rising interest rates could hit companies’ earnings and tip economies into a recession. Inflation in the Eurozone rose to 8.6% in June due to soaring energy and food costs. The European Central Bank is set to raise interest rates later this month to tackle inflation, with investors worried about how aggressive the central bank will be. At the same time, sentiment among consumers in the continent appears to be deteriorating.

UK: Economic effects of Brexit to the fore

The UK’s trade performance this year fell to its worst level since records began. The weak performance of UK exports and a surge in imports highlight the economic effects of Brexit. The governor of the Bank of England said that the UK economy is probably weakening more than others attributing the problems to the energy price shock alongside the problem of people dropping out of the labour market. This will likely mean that UK inflation is likely to stay higher than other economies and for longer.

The Omnis Managed funds, Openwork Graphene Model Portfolios and Omnis Managed Portfolio Service provide you with a diversified asset allocation in line with your Attitude to Risk, investing in Developed Market Equities, such as UK, US, Europe and Asia Pacific as well as Emerging Market equities.  Cautious and Balanced investors will also have significant holdings in UK and Global Bonds, as well as Alternative Strategies.  We believe this multi-asset approach aims to minimise global equity market falls in volatile periods.  Past performance is not a guide to future performance.  The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations.  You may not get back the amount you originally invested.

At Money & Mortgages, our team are happy to arrange video meetings and phone appointments.  For more information please contact us on 0161 505 0601 or via email info@moneymortgages.co.uk

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