Global Markets Newsletter – September 2019

In the US, September was a volatile month especially at the end of the month, due to the continuous trade war between US and China . There were even discussions to delist Chinese companies from the stock exchange.
The White House launched a formal impeachment inquiry against President Trump that worried markets. Meanwhile, the Economy stands strong with GDP for the 2nd quarter of 2019 at 2% (slightly decreased by 0.1%), inflation at 1.4%, unemployment at 3.7%. Nevertheless, disappointment came this time from the real estate sector, as housing starts dropped at 1.25m (from 1.36m), building permits also dropped at 1.31m (from 1.42m) and new home sales were fewer at 3.5% (from 7.1%).

In Europe, markets moved in a posititve field with focus on BREXIT and Boris Johnson. The collapse of the British giant Thomas Cook worried markets with a domino effect in the tourist industry. ECB remains the major lender for banks, which now have to provide loans at low cost. The Eurozone at worryingly very low inflation (0.2%), consumer confidence at -7 (from -6.5), low business index (47.3 from 45.6) and slightly better business climate (-0.22 from 0.11).

The EUR/USD moved more towards 1.08, which is the next target and stabilised around 1.09 at the end of the month. Prospects remain positive for the US dollar and a further strengthening is more likely.

Our preference remain in US equities versus European stocks, where we hold no positions. US equities account for 70% of the total portfolio, of which the technological sector holds 60%. Europe continues to be in dire straits on the way for a healthy and substantial growth, while in the US bonds have moved more than enough pending correction. Cash remains crucial as volatility provides buying opportunities.

Global PMI (Source: Bloomberg)
Euro-Area Inflation (Source: Bloomberg)
EUR/USD (Source: Bloomberg)

Disclaimer: This document is for general information only and is not intented as investment advice or any other specific recommendation as to any particular course of action, or to solicit any product or service. The information provided herein is not legally binding and it does not constitute an offer or invitation to neter into any type of financial transaction. The information in this document does not take into account the specific investment objectives, financial situation, tax situation or particular needs of the reciepient. You should seek your own professional advice suitable to your particular circumstances prior to making any investment or if you are in doubt as to the information in this document.