The DAX, an export-driven index, is seeing this euro rally feeding straight through into concerns that it will dampen the export ability of the companies.

Lorne Baring

Categorized in : Company News

All the FTSE 100 companies, except for financials, with majority earnings outside the UK are boosted by the substantial fall in sterling which will inflate overseas earnings in the next results.

The possibility that China is stabilising is reassuring markets after a torrid couple of months at the beginning of the year.

Geopolitical risk, including acts of terrorism which directly affect trade or movement, remains a significant risk factor to monitor, in a period where there is suboptimal growth both in Europe and globally, combined with equity valuations that are no longer cheap, there exists an environment which is susceptible to shocks that can act as a trigger for falls in asset prices.

The BOJ is running out of monetary policy firepower, so it was not a surprise to see that there is no change to the policy this week, also, China's industrial output figures at the weekend showed contraction yet again and underscore the weakness in demand from the world's second largest economy. There is still a soft demand coupled with an excess supply story in the commodities spectrum.

There is still a soft demand coupled with excess supply story in... by Lorne Baring

There is still a soft demand coupled with excess supply story in the commodities spectrum.

The global macro picture hasn't changed and we are still seeing a supply glut and a weak demand environment, i believe the recent spike in share prices is a short-term phenomenon. Do not chase commodities-related companies.

The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is undercapitalised in Europe and credit conditions are sub-optimal, combined with the global macro backdrop, with Chinese growth slowing down, there is a natural impact around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalised in Europe and credit conditions are sub-optimal, and when combined with the global macro backdrop, with Chinese growth slowing down, there is a natural impact of it around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

There is a high probability of a further correction in equity prices, led by banking and energy stocks.

The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalised in Europe and credit conditions are sub-optimal, and when combined that with the global macro backdrop, with Chinese growth slowing down, there is a natural impact of it around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

The CDS market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalized in Europe and credit conditions are sub-optimal.

With the confirmation of the Fed rate rise due to a strong U.S. economy, investors took cheer as the decision formalises opinion that the U.S. economy is broadly expanding.

European equity markets are catching the tailwind from the U.S. after strong close yesterday. Investors are showing resilience to the recent attacks in Paris despite mounting worries over security in Europe, overall there is a macro tailwind for European equities. The monetary policy of the ECB will continue to weaken the euro versus other major currencies. We are continuing to recommend an overweight in European equities.

The DAX was punished by the scandal at Volkswagen, and it seemed overly sold during the global sell-off in the summer. But those moves were overdone.

Europe's main indices are attractively valued on a price-to-earnings basis, and with no shocks in the peak period of earnings reporting season in the U.S., it appears that equity investors may have found a base to build upon after the rout in August and September, easy monetary conditions are clearly going to remain for some time and that is also bolstering sentiment at the moment. We would expect further gains after a rough period for global investors.

Sentiment is very fragile. We are seeing a confirmation of the slowdown in China, european stocks could get even cheaper in this period of volatility but longer term, they look like good value and dividend yields are attractive. We are advising our clients to remain invested in high quality European stocks.

Regional equities are attractive and well supported by the fundamentals today, notably Europe, the U.S. and Japan where earnings multiples are in an inexpensive range of 12 to 18 times currently.

Investors have a glimmer of hope from the fact that in Alexis Tsipras' speech he still refers to a deal being struck, however, in the face of the Greek tragedy and China market turbulence, investors still have plenty to worry about.

Investors have a glimmer of hope from the fact that in Alexis Tsipras' speech he still refers to a deal being struck. And with the removal of Yanis Varoufakis as finance minister, there is clearly an intent to improve relations with the Troika creditor group, however, in the face of the Greek tragedy and China market turbulence, investors still have plenty to worry about.

We started investing in factor-based funds two years ago and now about one-fifth of our total ETF allocation goes to these funds, it is very useful to tilt a portfolio towards the style an investor would like such as growth and value.