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April Market Commentary

Posted on: 10th Apr 2017 by: CamOuse Financial Management Limited


It’s tempting to think that Brexit is the only story worth reporting: in fact, there was plenty happening in March, from elections in Holland to a rate rise in the US, new growth targets for China and – also in the Chinese capital – a park which spectacularly failed to live up to its name…

The main global news was that finance ministers from the world’s biggest economies have dropped an anti-protectionism commitment after opposition from the US. G20 ministers usually end their meetings with a commitment to bolster and support free trade and last year vowed to “resist all forms of protectionism.” That was, of course, before we had President Trump and his ‘America First’ policy…

It was a relatively quiet month on world stock markets: seven of the markets we cover were up and five were down, but none of them by very much. The best performing market was France, with good news on both the political and trade fronts seeing Europe’s two leading stock markets move higher. 


On March 29th – two days before her self-imposed deadline – Theresa May formally sent a six page letter to Donald Tusk, President of the European Council, informing him that the UK would be leaving the EU. We will now have two years of negotiations before – in theory – the UK could leave the EU on Friday March 29th 2019. There will be plenty of twists and turns over the next two years and there will be good and bad news, whichever way you voted in the Referendum.

A prominent supporter of Leave, James Dyson, started the month by opening his second ‘tech campus’ in the UK at Hullavington in Wiltshire, as he looked to double his UK workforce to around 7,000 and pronounced himself “optimistic” about the country’s future. 

Vodafone also announced plans to create 2,100 service sector jobs and UK unemployment was down to its lowest rate since 1975 as it fell to 4.7%. However, wage growth also slowed, falling from 2.6% to 2.3%. 

One man who might now be worrying about unemployment is Chancellor of the Exchequer Philip Hammond, who delivered what he must have considered a jolly fine Budget speech, full of reassuring news and witty cracks at the expense of Her Majesty’s Opposition. Unfortunately, Hammond was swiftly forced to backtrack on his decision to raise Class 4 national insurance contributions.

The Bank of England’s Monetary Policy Committee kept interest rates on hold at 0.25% – and at that level it is little wonder that the UK savings ratio (the proportion of income which households save) has fallen to its lowest level since the early 1960s. 

UK inflation went in the other direction, pushed higher by rising fuel and food prices. It reached 2.3%, the highest level since September 2013, with the Bank of England expecting it to peak at 2.8% next year. It was confirmed that the UK economy grew by 0.7% in the final three months of 2016, with the Bank now expecting the economy to grow by 2% in the whole of 2017. 

The FTSE 100 index of leading shares closed the month up 1% at 7,323 having reached a record high of 7,424.96 in mid-March. 


It’s important not to get fixated on Brexit: life in Europe went on perfectly well despite the UK’s formal decision to leave the EU. 

The Dutch election saw Prime Minister Mark Rutte’s Liberal party comfortably win the most seats, pushing the far-right Freedom party into second place. It is also looking increasingly likely that Emmanuel Macron will defeat Marine le Pen in the French Presidential race, so there will sighs of relief through Europe’s corridors of power. Economists have been predicting that the euro will fall below the dollar if Le Pen wins. 

There was more good news for Europe on the economic front with the influential Markit Purchasing Managers’ Index rising to 56.7 and suggesting that growth in the Eurozone was at its best level for nearly six years. The report’s authors also said that job creation was “at its best level for nearly a decade” – although obviously there remains a very long way to go, given the problems of youth unemployment in countries like Spain and Greece. 

French carmaker PSA – maker of Peugeot and Citroen cars – reached a deal to buy Opel from General Motors. This also includes Vauxhall and its 4,500 staff in the UK and there will inevitably be worries about job losses. 

Boosted by the election result in Holland and the news about growth, it was a good month on Europe’s stock markets: the German index was up by 4% to 12,313 while the French market rose by 5% to 5,123. Even Greece joined in the fun, with the Athens market rising by 3% in March: ominously, though, it closed at 666…


The month in the US opened with Chairman of the Federal Reserve Janet Yellen saying that ‘interest rates may rise.’ A week later it was confirmed that the economy had added 235,000 jobs in February and the rate rise was all but certain: it duly arrived at the monthly meeting of the Federal Reserve policymaking committee, as the rate moved up by 0.25% to a range of 0.75% to 1% – only the third rate rise in a decade. 

In company news, Intel made a $15bn bet on driverless cars as it bought Israeli company Mobileye: working with BMW, they are planning to have 40 test vehicles on the road by the second half of this year. 

No driverless cars for Uber – and plenty of problems for boss Travis Kalanick who was filmed swearing at a driver who had complained that his income was falling. No doubt Mr. Kalanick will console himself with the thought that the latest round of funding values Uber at $68bn – which makes the $24bn stock market debut of loss-making Snapchat (just the $516m in 2016) look positively pitiful. 

Ford confirmed its further commitment to the US with a pledge to invest $1.2bn in its Michigan plant. And the month ended with good news as growth for the fourth quarter of 2016 was revised upwards from 1.9% to 2.1%.

There was no upwards revision on Wall Street though, as the Dow Jones index fell back by 1% in the month to close at 20,663.  

Far East 

It was a relatively quiet month in the Far East, both for news and for the region’s stock markets. 

Chinese Premier Li Keqiang announced that the country’s growth target for this year would be 6.5%, down from last year’s 6.7% – when the country’s economy grew at its slowest pace for 26 years. Li said that the state would tackle ‘zombie enterprises’ – state enterprises which produce more coal and steel than the market needs which frequently leads to ‘dumping’ abroad – but in the past this has proved notoriously difficult to achieve. 

In Japan, the beleaguered Toshiba Corporation continued to slide as it was given permission to delay announcing its earnings. The company is still struggling with huge cost overruns at Westinghouse, the US nuclear firm it bought in 2006. 

There were struggles of a different kind for former South Korean leader Park Guen-hye whose impeachment over a corruption scandal was upheld by the courts: three people died in the ensuing protests. 

On the region’s stock markets, both China and Japan fell back by 1% in March, to 3,223 and 18,909 respectively. The Hong Kong market was up by 2% to 24,112 whilst the South Korean market ignored its former Prime Minister and rose 3% in the month, closing at 2,160. 

Emerging Markets 

It was a difficult month for the emerging markets we cover. Regular readers will know that in 2016 Brazil was the best performing market of the ones monitored in this report, rising by 39%. It also started this year strongly, gaining 10% in the first two months alone. However, it has now been confirmed that the country has been in recession for two years, with the economy shrinking by 3.6% in 2016: it is now 8% smaller than it was in December 2014. The main reason has been the fall in commodity prices, and the recession has seen unemployment rise by 76% to 12.9m – equal to a rate of 12.6%. Not surprisingly, the stock market declined in March, falling 3% to 64,984. 

Back in November, Indian Prime Minister Narendra Modi announced that 500 and 1,000 rupee notes (worth around £6 and £12) would no longer be legal tender, in a move designed to reduce corruption. March saw the deadline for handing in the old notes and there was predictable chaos in the banking system, with 40% of cash dispensers being empty. Having handed in their old notes, customers couldn’t then get new ones. But the Indian stock market is clearly an advocate of the cashless society: it was up by 3% in the month, ending March at 29,620. 

There were relatively few dramas in Russia, where the stock market has had a miserable start to the year. It fell 2% in March to 1,996 and is down 11% for the year as a whole. 

And finally…

There has never been a month like March 2017 for the ‘and finally’ section. The world may not have gone mad, but it certainly went quirky.

A young man’s thoughts turned to spring and the thoughts of Mike Ashley, owner of Sports Direct and Newcastle United, turned to buying Agent Provocateur, the lingerie label which had gone bust. Given Mr Ashley’s penchant for publicity, the Newcastle players must be dreading next year’s first team kit…

Then there was the Indian washing machine introduced by Panasonic, which now comes with a special ‘curry’ button following customer complaints that they couldn’t get the stains off their clothes. Parents worldwide have written to Panasonic suggesting buttons labelled, ‘grass,’ ‘mud’ and ‘tomato sauce.’ 

…And finally, off to Beijing where a public park has introduced face recognition technology to ration loo roll. Visitors to the park were apparently tearing off extra loo roll and taking it home with them: the authorities acted swiftly and brought in the facial recognition software which now dispenses a fixed length of loo roll. The park is called the Temple of Heaven: let’s hope no one in the Temple of Heaven has eaten a curry…

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