4 April 2019

Hanging on still

Markets are looking remarkably healthy, given continuing uncertainty over global trade and Brexit.


Shares have staged quite a recovery in the first quarter of 2019. The benchmark index in the US – the S&P500 – had its best quarter since 2009, recovering much of the ground lost in the last three months of 2018. In China we saw a significant recovery from the bear conditions that crept in last year, with the best major equity market rise being recorded by the Shanghai Composite index. Our own Footsie index is not doing too badly either – up 10% so far this year. Interestingly, the best performance during the first quarter of this year came from the oil price – not necessarily a negative indicator.

But not all the news is good. The pain being felt in Britain’s high streets continues with the Bonmarche chain the latest to report falling sales and mounting losses. Specialising in clothes for the over 50s, Bonmarche has more than 300 stores and does at least have a rescuer. Philip Day, the billionaire owner of the Edinburgh Woollen Mill shops, has acquired more than 50% of the shares and has mounted a full bid, though at a disappointingly low price. Once he gains proper control, store closures and redundancies look likely. He’s already carried out similar exercises with Austin Reed and Country Casuals.

As we start the second quarter of this year there will be plenty of economic indicators for analysts to get their teeth into. Purchasing Managers’ indices proliferate at the beginning of the month. These are reckoned to be a good forward indicator of where the economy is heading as businesses make judgments on what goods, services and materials they are likely to need to deal with their expected order flow. The picture has been mixed in recent months, though early indications are of a modest improvement in sentiment.

We will also hear from the Halifax on what is happening to house prices. Already the indications are that uncertainty over the way in which we leave the European Union has impacted on activity. One survey has already reported an actual fall in prices for the first time in some years, so at the very least we should expect a slowdown in the rate of growth. Perhaps a resolution over how we are to leave the European Union might allow growth to resume, but we still don’t know what is to happen and the delayed deadline is approaching fast. The big losers in all the chaos that has ensued is, I fear, the politicians themselves.


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