In this month’s Global Markets Overview:

  • The US mid-term elections led to the Democrats gaining control of the House of Representatives and the Republicans maintaining their majority in the Senate. Whilst in the United Kingdom the ongoing political news flow in relation to Brexit negotiations have impacted the GBP and the prices of domestically-focused UK stocks.
  • The volatility which we witnessed in global asset markets in October has continued into November. This period of higher market volatility is typical when economies are in the late-stage of their business cycle. That is, sufficiently strong GDP growth has eroded most of the spare capacity in the global economy, prompting most major central banks to begin to gradually tighten financial conditions via either interest rate increases, a pulling back of money printing, or both.
  • One of our key views is that the combination of the US fiscal stimulus rolling off and the US monetary tightening experienced so far will slow US economic growth to below trend by the end of 2019, which will put downwards pressure on US corporate earnings growth and equity returns.

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