Data key as wealth managers gear up for volatile summer
By International Adviser, 1 Apr 16
Like Janet Yellen’s Federal Reserve, it would appear that UK wealth managers are planning to be very data dependent in the second quarter.
We still think that US equities are going to continue to outperform. We’ve seen that over the last four or five weeks since the February lows. In particular from a top down point of view, there are more positive surprises from the economic data coming out of the US than there are coming out of the other regions. Although the economic data is improving worldwide, there seems to be more positive surprises in the US and that tends to be a fairly good guide for short term relative performance.
I think China has clearly been weighing on investors’ minds for the last nine months. And we have seen some China-related sectors lead the equity market recovery this time – capital goods, stocks, industrial machinery, that sort of thing. Now that’s good news because usually sustainable equity market rallies occur when cyclical sectors outperform; it’s sort of an indicator that the market sentiment is really behind the rally. However, China is still going to remain a source of concern, so I think it’s important to monitor the China data – both the government data and also the profit data from the private industries, which tend to be increasingly a more reliable gauge of activity.