2018 saw the return of volatility to risk assets, particularly in equity markets. The year began with strong returns in January before a fall off in markets as concerns about escalating global trade tensions escalated. Within Europe, political risk was heightened once again, with Brexit, Italian fiscal policy, and French social unrest all evident. Economic growth expectations remained above long-term averages in 2018, but did begin to trend downwards from previous years. December saw the biggest falls with the majority of risk assets providing negative calendar year returns.
2019 will be an unpredictable year and we will need to prepare ourselves for higher volatility. Continuing tensions between America and China, the uncertainty of Brexit, and continuing issues within European politics are all major areas of concern where there is no certainty of outcome. Global economic growth continues to remain positive; however at a much slower pace than in previous years, with inflation looking to remain low. January has seen stocks make gains for the fourth week in a row, making it the longest stretch of weekly gains since August 2018. It is very important that you review your portfolio, especially if you have not done so in the last year.