Markets rally despite political and economic headwinds
After a wobble at the start of last week following the surprise French election results, financial markets managed to regain their poise. Closer to home, news that the UK had slipped back into a 'double dip' recession, whilst received in disbelief, was nevertheless unnerving.
Spain also joined the EU recession club and received another blow to confidence when rating agency Standard & Poor's cut the country's sovereign credit rating by two notches, predicting that the country's recession would continue into 2013. But despite this less than welcome flow of news, markets remained impassive with most major equity indices making gains.
Also in this week's bulletin...
- Despite Government sanctioned austerity and tightening fiscal policy, news that Ireland could soon exit its international bail out programme demonstrates to other European nations that these measures can lead to economic recovery.
- On the other side of the Atlantic, the world's largest economy continues to gain momentum but unlike the EU, America has not embarked on a programme of austerity, preferring instead to spend its way out of recession.
- Nick Purves of RWC explains why, despite the low growth outlook for the UK, news that we've slipped back into recession should not be a signal for investors to sell UK equities.
View this week's Market Bulletin (PDF), which contains thoughts and opinions of St. James’s Place and our range of investment managers on the key issues affecting investors.
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