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)

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