Capital Market Outlook December 2015

Asset Class                        December 29th, 2015

  • USA
  • Equities –               Chinese growth concerns and Fed Fund speculation provide short term buying opportunities.  
  • Govt Bonds –         Mild fall in bond prices, but supported by yields.      

 

  • UK
  • Equities –               As per  USA.      
  • Govt Bonds –        Low yields offer no incentive to hold.
  • Currency –             Only gradual increase in interest rates to a low level permits currency downside.

 

  • Eurozone
  • Equities –               Currency fall and QE to aid short term recovery.
  • Govt Bonds –         QE and deflation maintain support.
  • Currency –              Move to monetary easing aid currency’s to fall to fair value.

 

  • Japan
  • Equities –               AS per USA.
  • Govt Bonds –         Declared inflation target scares marginal government bond traders.
  • Currency –              Loose money, low growth and debt downgrades maintain pressure.

 

  • Rest of the World
  • Equities –                Potential to recover on internal rate cuts.
  • Commodities –      Difficult to make headway on US dollar appreciation, awaiting reduction in oil production investment.


Uncertainties

  •        Chinese military developments.
  •        Russia/Ukraine.
  •        Regulation of financial institutions and products.
  •        Religious extremism.

 

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