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LCP Investment Summary December 2018
Posted on 3 January, 2019 by Administrator
Global equity markets fell sharply in December, to end a year that was marked by market highs and also periods of extreme volatility. Investors remained nervous as the month progressed over slowing global economic growth and also over the potential effect on future growth from the ongoing trade wars, particularly between the U.S. & China, discounting to some extent the ‘trade truce’ agreed in Buenos Aires in early December.
This led to expectations that the U.S. Federal Reserve may pause its planned interest rate rises for 2019 but those hopes were dashed following the Fed’s meeting on 19 th December, leading to sharp falls in equities globally. Market volatility remained over the Christmas period, with U.S. equities down sharply again on the 24th (Christmas Eve) but then up 5% on the 26th , their best day since March 2009.
Longer-dated Eurozone bond prices rose 1.7% in December, with the yield on the AAA Eurozone 15+ Year Index falling to 0.76% by month-end. The Euro Broad Sovereign 10+ Year Index rose by 1.6% with its yield falling to 1.69%. The sharp falls in equity markets in December again saw investors buying AAA-rated government bonds as a ‘safe haven’ which pushed yields lower, as did the U.S. Federal Reserve’s announcement that it had lowered its projections for interest rate increases over 2019. Slowing global economic data also added to negative investor sentiment.
Sample DC Schemes
Two of our sample DC Strategies fell in December as most asset classes fell sharply.