Imperium Capital Publication

Viewpoint – November 2017

Equity markets continued to rise in October, with several indices hitting all-time highs. The MSCI AC World Index has now risen for twelve consecutive months, taking 12 month returns to 23.2%. Volatility, typically measured by the VIX index, also reached alltime lows. The global economic backdrop remained supportive for equities with the synchronised global recovery continuing, as many economies, irrespective of geography, continue to expand.

The global economic backdrop was particularly beneficial to emerging market equities which continued to outperform developed markets, posting a 3.5% return in US Dollar terms, versus 1.9% for developed markets. Japanese stocks also outperformed, posting a 5.4% return in Yen terms, with investors reacting positively to the re-election of Prime Minister Shinzo Abe which should ensure continuation of stimulative policies. US equities rose 2.3% during the month, following better-than-expected GDP growth in Q3 of 3.0% annualised versus a 2.5% consensus, robust earnings data and unemployment falling to 4.2%. Given the backdrop of low inflation and the disruption from Hurricane Harvey and Hurricane Irma, the US economy and equity markets remained resilient.

Weekly Digest – 29 October 2017

  • US equities hit record highs
  • The European Central Bank announces QE taper plans
  • UK and US GDP growth beats expectations
  • US House of Representatives votes in favour of 2018 budget
  • German business sentiment hits record high
  • Brent crude oil prices rose 4.7% during the week

Viewpoint – October 2017

During September the global economy continued to be supportive for risk assets, with global equities performing strong. Government bonds retreated in light of the more risk-on environment, whilst the US Dollar strengthened towards the end of the period, a contrast to its large year-to-date falls.

During the quarter developed equity markets returned 2.2% with almost every major region partaking in the rise. Within developed markets, Japan posted the strongest returns in local currency terms advancing 4.3%, followed by Continental Europe with a 3.9% gain. Emerging markets posted returns of -0.4%, the first negative month since November 2016.