Following a weak spell during the second half of 2018, global equity markets have staged a recovery in the first four months of 2019. Reasons for this are that while GDP in both China and in particular in the USA has exceeded forecasts, this has been achieved without the re-emergence of undue inflationary pressures so that central banks in the USA, Europe, Japan and the UK have not felt it necessary to raise interest rates in order to curtail demand.

Company results, another key driver of equity markets, have generally been acceptable, albeit with some exceptions.

The continuation of cheap money has supported values in fixed interest markets. Given that rate rises look unlikely, perhaps for the rest of this year, the fixed interest sector appears set to remain broadly stable for a while.

Looking ahead, while there were some ‘one off’ factors that boosted US GDP in the first quarter, the outlook for both global growth and inflation for the foreseeable future look reasonable. For the moment therefore, we are broadly comfortable with current market levels.

A word on the UK, where the outlook for key aspects of the economy after Brexit, if indeed it happens, remains the subject of much speculation. Trade deals with non-EU countries are proving difficult to pin down while the long-term EU relationship itself, the key market for our goods and services, looks set to remain deeply uncertain for years to come. Brexit risks to the economy should not be understated: within UK equity markets we favour funds with relatively high exposure to companies with overseas earnings, while the long term outlook for the Gilt market is, in our view, negative, making this a sector that we have avoided for some while.