April wealth update: Trade wars and interest rate fears

Following the Easter weekend, global stockmarkets rallied in April as fears of a trade war between the United States and China reduced on the back of a Trump ‘friends’ tweet. However, the biggest gains were made closer to home following Mark Carney’s surprising announcement that the expected interest rate rise in May was now less certain.  This resulted in £ Sterling falling against the US Dollar, which boosted UK blue chip companies.

As a result, the FTSE 100 ended April at 7,509.30 , which was 6.4% higher than the March closing figure of 7,056.61.  This is now only 2.3% lower than the 2017 closing figure of 7,687.77 after a difficult February and March.

In the US, the Dow Jones Industrial Average had a much smaller recovery albeit reversing the trend of the previous two losing months.  It rose 0.3% to close April at 24,166.38.  It is now down 2.2% since the end of 2017 but still more than 22% higher than the closing figure in 2016.

In terms of £ Sterling, it ended April at 1.38 US Dollars.  This was 1.7% lower than the closing figure at the end of March of 1.40 US Dollars.

Against the Euro, £ Sterling ended April at 1.14 Euros, which was 0.2% higher than the March closing figure.

Inflation, as measured by the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was 2.3% in March 2018 (this is March’s data which is reported in April). This was down from 2.5% the previous month.  The 12-monthrate for the Consumer Prices Index (CPI) rate which excludes owner occupied housing costs and council tax was 2.5% in March 2018, down from 2.7% in February 2018 and 3.0% in January 2018.

The Bank of England chose to keep interest rates unchanged this month. As mentioned earlier, there was a high expectation that we would see a rate rise in May.  However, Mark Carney announced that, while the trend in interest rates remains upwards, the precise timing was now in doubt.  He cited weaker retail sales figures, in part caused by the so-called Beast from the East cold snap, as one factor.

This will be a disappointment for long-suffering deposit savers, who last saw an increase in interest rates to 0.5% in November 2017, and are continuing to lose money in real terms when you consider the rate of savings interest compared to the rate of inflation.

Past performance is not a guide to future performance.  The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations.

You may not get back the amount you originally invested.