Market Monitor April

In European market news;

On Wednesday of last week Sir Tim Barrow, the UK’s Permanent Representative to the European Union, delivered a six page letter signed by UK Prime Minister Theresa May that documented the UK’s intention to leave the EU and marks the official start date of the two year exit process. Markets were largely unchanged following the forewarned event, while it is unlikely that detailed negotiations will begin before June.

UK equities fell 0.1% last week, while sterling rose 0.4% against the dollar, to USD 1.255

Continental European equities rose 1.5% for the week. Supporting economic data included German unemployment falling to 5.8%, a record low, as well as retail sales rising 1.8% in February, beating expectations of +0.7%.

In the US;

Positive news included an upward revision of the Q4 2016 GDP growth number: from +1.9% to +2.1%, annualised. Personal consumption expenditure experienced the largest adjustment: up 0.5 to +3.5% annualised. This came after the US consumer confidence index rose 9.5 points to 125.6 on Tuesday; its highest level since December 2000.

After a minor correction in the week before last, US equities rose 0.8% last week to record a positive 0.1% return for March.

In Emerging Markets;

In South Africa equities fell 8.4% last week, while the South African Rand fell 7.2% against the US dollar, to ZAR 13.58. This followed the dismissal of nine cabinet members, including the Minister of Finance, by South African President Jacob Zuma.

In commodities;

Brent crude oil prices rose 4.0% over the week to USD 52.83 per barrel.

BMW announced their intention to close their pension scheme by 31st May in a move that could reduce employee’s retirement income by £160,000. As a consequence, workers at BMW’s UK plants are taking strike action and will call eight 24 hour strikes across four sites on 19 April and ending on 24 May.

A new study by JLT Employment Benefits found that twenty firms now in the FTSE 250 have pension deficits that dwarf their market value with Southern Rail owner Go-Ahead’s liabilities almost four times the value of their business. ‘The number of firms that could be dragged down by their pension liabilities is significant’ said Charles Cowling, the director of JLT. He referred to 26 companies with pension liabilities of more than a billion, the largest being bus operator FirstGroup with disclosed pension liabilities of over £4 billion. For further information regarding the growing deficit please feel free to see our latest article which looks at seven of the worst schemes at present and further detail surrounding the growing deficit.