In March’s episode of the Evelyn Partners Investment Podcast Cherry Reynard and Daniel Casali look at what’s happening at home – with a new Brexit agreement, and away – with improving employment data and better news on inflation. The economic news may be encouraging, but markets seem unimpressed. They discuss why investors aren’t more enthusiastic, and where opportunities lie from here.
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The UK signed a new Brexit deal this week, potentially solving the thorny issue of the Northern Ireland protocol. This is undoubtedly a boost for UK companies, which also benefit from lower valuations and a higher dividend yield. It helps make the case for UK equities after a long time in the doldrums.
There is also stronger economic data globally. Employment, retail sales and company earnings have all given cause for optimism in recent weeks. At the same time, inflation appears to have peaked in many parts of the world, which may reduce the need for central banks to raise rates significantly from current levels.
However, markets have greeted this news with a shrug. They remain troubled by the prospect of more rate rises from the Federal Reserve, with chair Jay Powell continuing to talk tough on inflation. This is dampening any potential boost from the reopening of China.
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