We have seen a rise across major global markets for the second consecutive month in February as stocks edged higher in light of positive developments. Markets have surged on trade war optimism, the Fed has provided reassurance on its dovish stance and Chinese monetary stimulus has started to gain traction.
Teresa May has carried Brexit into its final month with a no deal in place. This might ultimately be good politics, but it has certainly had its effect on the UK market and its outlook. It is no surprise that investors have been deterred and have been consistently underweight towards UK equities, in particular, the domestically-exposed equities. We see a strong opportunity in the near term as recent uncertainty still persists and continues to be a drag on the UK economy. Even with an extension to Article 50, it is likely that the UK Parliament would rule out the option for a no deal, thus bolstering investor sentiment and offering quick gains in the UK equities market. Our CPN portfolios benefitted from the TB Evenlode Income Fund rising 3.5% during the month, compared to the FTSE 100 index which only increased by 1.5%.
The US continues to grow as more job opportunities have increased consumer spending, even though attitudes deteriorated during the government shutdown. Substantial progress has been made over trade between the US and China, rallying global markets higher once again. The Fed has not given any signals of a change in its stance in the coming months and said that future adjustments would depend on economic data. Due to its superior track record in investing in the best global large caps, we hold the Fundsmith Equity Fund across most of our portfolios. It is largely exposed to the US and gained 4.4% in February, outperforming most major global indices.