Market Overview

Markets overall delivered good positive returns for the quarter, despite witnessing strong risk-off moves during May. Within equity markets, Europe and the US led the way, while the UK, Japan and Emerging Markets provided more modest returns on the back of Brexit uncertainty, trade and manufacturing worries, a planned tax hike in Japan and slower growth in China. Boosted in part by recent sterling weakness, global developed market equities returned 6.5% in GBP terms while UK equities appreciated by 3.3% over the quarter.

Intensifying trade-war concerns, slower global economic growth and a decline in manufacturing activity caused expectations for a cut in US interest rates to grow over the second quarter. Combined with softer inflation data, global interest rates end the quarter sharply lower, providing a strong tailwind to fixed income markets. Emerging Market debt performed especially well and local currency debt in particular, benefiting from the dual tailwinds of falling local yields and Emerging Market FX strength versus GBP.

For our full review of the quarter please download the report.