The most important factor for investors now
23rd April 2018 11:41
by Rebecca O'Keeffe from interactive investor
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Trade tariffs, US sanctions and technology are all having a push and pull effect on equity markets. Despite some optimism that the US and China will reach a truce on trade tariffs, investors are not putting out the bunting yet, as discussions between the world's two largest economies are likely to be protracted and the negotiation style of President Trump provocative.
But it is not just trade tariffs and sanctions with China that are the focus of attention. Some commodity markets have been thrown into turmoil over recent US sanctions on Russian oligarchs and their companies.
While metal prices have come off their highs, they are still trading at elevated levels, with aluminium prices more than 20% higher since sanctions began earlier this month, which has started to prompt cries of anguish from those in the supply chain, including German auto-manufacturers.
However, perhaps the most important factor for investors is the current concern about technology stocks and whether the tech cycle has turned. Previously one of the key drivers for market valuations, the current catalogue of issues, both company specific and sector generic is a major risk for markets.
Source: interactive investor Past performance is not a guide to future performance
Sterling is stable this morning after last week's rollercoaster ride saw it reach recent highs before falling sharply.
The probability of a May rate rise halved last week from 90% to 45%, after Mark Carney called into question the possibility, reversing all previous comments which had paved the way for interest rates to rise.
However, the Monetary Policy Committee (MPC) decision is just one of many factors affecting the outlook for sterling.
With UK economic growth lagging behind all other major economies, and the path of Brexit once more looking distinctly rocky, sterling's recent strength is in danger of reversing sharply, particularly if Prime Minister May's position comes under further pressure.
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