Below is a monthly comment from one of our investment partners.
March marks the seven year anniversary of the bottom of the equity market cycle. Since the low of 2009 the FTSE 100 has rallied 130%. The past seven years have been a time of monumental change in the economic environment, markets and most prominently, Central Bank policy. So far 2016 hasn’t been short of excitement. We saw the worst ever start to the year for equity markets as investors struggled through January and the first half of February, only for sentiment to reverse and risk assets to rally through the second half of the quarter. March was a month of revival, Emerging Markets and Asian equities were up strongly off the back of currency movements and UK and US small and mid cap companies also benefitting. Following strong performance in March, the first three weeks of April have also been positive.
As risk assets have benefited, month-to-date gilts have struggled, down 1% for the month (at time of writing). The key drivers of markets so far this year are primarily the continuation of themes we saw develop during 2015; namely the lower oil price, concerns over China’s GDP growth and global monetary policy divergence. UK investors seem, for the time being, to be leaving their cautiousness about China’s growth behind instead looking ahead to the scenario of Brexit and the increased volatility this political upheaval could generate as we head towards the referendum date.