Read the latest in market and economic news from Seven Investment Management, together with an update on the latest funds. Investors should seek advice before buying any investments. The funds detailed here are for information purposes and not a recommendation.
EUROPEAN GROWTH BROADENS
Industrial output in the 19 Eurozone countries rose by more than was expected in May, up 1.3% month-on-month and 4.0% year-on-year, helped by a spike in both the production of capital goods and consumer durables. All four of the main economies posted positive numbers and the highest increases in industrial production were registered in Lithuania (+3.8%), Romania (+3.5%) and the Czech Republic (+3.3%). Six markets noted negative. The positive news of these trailing indicators tallied with forward looking data, which is also pointing to a sustained recovery.
UK UNEMPLOYMENT FALLS FURTHER
UK unemployment fell by 64,000 to 1.49 million in the three months to May according to the Office for National Statistics (ONS). This leaves the unemployment rate at 4.5%, its lowest since 1975, at 4.5%. The figure for those in work climbed to around 32 million, a rise of 324,000 on last year and the largest total since records began in 1971, despite the government removing 21,000 funded trainee positions. However, wage increases continued to fall further behind: earnings (excluding bonuses) rose by 2.0% year-on-year; inflation hit 2.9% in May. When the impact of inflation is factored in, real weekly wages fell by 0.5% compared with a year earlier.
CHINA GROWTH NOT SLOWING
China's economy grew at an annual rate of 6.9% year-on-year between April and June according to official figures, slightly higher than forecast and at the same pace as in Q1 2017. Expectations were that the economy would slow following efforts by the government to rein in the property market. However, property investment grew by 8.5% in 1H 2017, up from the same period in 2016, and leaving some to believe that the tighter lending rules may take longer to have a cooling effect. Other data released also pointed to higher growth rates: industrial output for June grew by 7.6%, well above the forecast 6.5%; year-on-year retail spending grew 11% in June; and imports and exports growth beat expectations.
In her semi-annual testimony to Congress, Federal Reserve chair Janet Yellen said that interest rates would not have to rise by much to get a neutral policy stance, but appeared less confident that the recent lower inflation would be temporary. Markets moved to price in only a 50% chance of a further rate rise in 2017 following her comments and reacted favourably to her message of taking things slow and beginning a gradual wind-down of the Fed’s balance sheet.
New funds have been added to the multi manager fund range. These are:
- An alternative fund from Angel Oak that specialises in high quality US Mortgage Backed Securities
- A US Micro-Cap manager called THB that focuses on US small and micro-cap stocks. 7IM and two other firms seeded the fund.
- A Emerging Market Frontiers fund from Ashmore and that will complement 7IM’s existing frontiers exposure
- The Oyster European Equity Fund from the SYZ house that is based in Switzerland and has a mid-cap bias.
The funds were invested in following a detailed due diligence process by the 7IM team to ensure that the funds help us diversify across investment opportunities, as well as manager style.
THREE ANNOUNCEMENTS DUE THIS WEEK
20 July – European Central Bank Interest Rate Decision // 20 July – UK Retail Sales // 20 July – US Jobless Claims
SOURCES: EUROSTAT, REUTERS, BLOOMBERG, 7IM
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Seven Investment Management LLP is authorised and regulated by the Financial Conduct Authority. Member of the London Stock Exchange. Registered office: 55 Bishopsgate, London EC2N 3AS. Registered in England and Wales number OC378740. The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The investments may not be suitable for everyone and if you have any doubts you should contact your investment advisor.