The first half of 2019 has been very rewarding for investors. The world’s stock markets, as measured by the FTSE World index, are up 16%! Among major markets the US is a clear winner, up 18% while other developed markets are up 13%. For the US, it’s been the best first half since 1997.
These numbers are flattered by the fact that we ended 2018 with very weak markets, so there is a strong element of catch-up in the data. Looking at the S&P 500 index in the picture below we can see that we are not that far away from where we were last September. The lack of a major negative in US-China trade talks also helped. The final support for stock markets has been the line-up in recent weeks by a flock of increasingly dovish central banks which coaxed markets over the line.
Economic data overall has been mixed and not a catalyst for market moves so far in 2019. I suspect trade and interest rates will remain key factors for the rest of the year. As well as divergence in returns at overall market level, there has also been meaningful divergence in sector performance. For example looking at global sectors; Technology is up 22%, Banks 11% and Food Retailers 1%.
It will be interesting to see active manager performances, for the first half of the year, against this background.
Tradewinds 