The start of 2019 has been surprisingly calm. European shares gained last week as better than expected German and US economic data emerged. Global equities have rebounded on the promise of US/ China trade deals. Bonds remain higher than persistent low inflation. Irish stock also rose to their best level in nearly a year.
We still believe that 2019 will be an unpredictable year and we will need to prepare ourselves for higher volatility. While the global outlook is positive growth remains slower than in previous years. There is little news on Brexit now that Article 50 has been extended to 31st October. If no agreement is reached by then a general election or a second referendum may need to be called. A possible recession in Germany, ongoing tensions between the USA and a number of other countries, and overall disappointing global economic data are all factors in slower levels of growth. ECB has also announced that it will not be increasing interest rates until June 2021. This year clients will need to take increased levels of risk to obtain the same levels of growth as in previous years. Risk isn’t for everyone, therefore expectations of returns need to be realistic for the foreseeable. Stay focused on the long term objectives. Stay invested through the ups and downs. Markets suffered losses of double digits in 21 of the last 38 years yet finished up positive 75% of the time. Ensure you have a diversified portfolio and spread risk across a range of assets, strategies, styles, currencies and ranges.