Weekly market outlook: 25 January 2013 – are things improving?With the Davos summit in full swing and equities experiencing an overdue upswing we’re facing an interesting junction for 2013. We’ve seen money moving away from bonds and into equities on a much larger than expected scale (apart from in Europe where inflows where less than a billion dollars last month!) and as a result we have indices back at near pre-crash levels. Emerging markets are producing outstanding forecasts for 2013 and we’re finally seeing a genuine appetite for risk across the board.
However, as always, a word of caution, looking at commodity prices, we’re not seeing the same bounce, giving some of us at Aston doubt towards some of the forecasts that those in the emerging markets are publicizing. This combined with the round two of America’s debt crisis, whether they vote to raise the ceiling or not in the near future, will cause a little more frothiness than some fund managers would like to expose themselves to after hiding in the relative safety of bond markets for so long. In our opinion, America will raise its debt ceiling as it can’t risk a negative shock at such a sensitive time.
So, our prediction for 2013 is mixed for the first quarter for then we expect much calmer levels of growth and a return to positive numbers in areas even as badly hit as US housing. With Spain continuing its downward spiral and the UK pushing for a referendum on EU membership, the lame duck will remain as Europe despite some promising numbers coming from as far afield as Ireland, this area continues to pose the biggest threat to global growth in our mind and we would recommend holding avoid large Euro cash holdings.
Yes, for those with nerves of steel some European banking stocks may prove appealing but this not for the feint hearted. With Apple having dropped significant market value this week we feel that this is a good buy right now given their reserves but without another industry changing product launch on the horizon, well at least until September, there might even be a better buying opportunity in the near future. If you’ve been keeping cash on deposit, now might be the time to be more bullish and dip back into equities.
2013 could present a good opportunity to get growth back into retirement funds and with legislation finally due out in 2013 regarding UK taxation and residency status, it’s important to pay close attention to maximize your opportunities and minimize potential tax burdens. As always, please feel free to get in touch with us for clarification on any issues.
If you have any questions on the above or anything else going on in the markets please don’t hesitate to get in touch.