To arrange an initial, no-obligation
consultation please call our office on:
0117 370 9770
or email us at


To arrange an initial, no-obligation
consultation please call our office on: 01173709770 or email us at


Week Watch | 19 August 2019

 Stock Take

“Rise, like lions after slumber/ In unvanquishable number! /Shake your chains to earth like dew/ Which in sleep had fallen on you:/ Ye are many—they are few!”

The closing lines of Shelley’s The Masque of Anarchy helped to turn Manchester’s Peterloo Massacre, which took place 200 years ago last Friday, into a rallying cry to give working class men the vote. In the immediate aftermath, however, the government ordered the courts and police to chase down journalists seeking to report on the event.

History, Mark Twain said, doesn’t repeat itself, but it does rhyme; Peterloo may stand alone as an event, but the war over elections and the media is alive and well. Last week, police in Moscow attacked (and then detained) demonstrators whose candidates have been barred from standing in elections; Chinese state media showed ominous footage of military manoeuvres near the Hong Kong border; and India continued its media blackout in Kashmir.

Investors largely deemed such events of only passing relevance to corporate outlooks. India’s SENSEX index slipped only a little last week; Russian stocks are on a flyer this year; and Hong Kong stocks, while they have been falling in price, are enjoying a rush of inflows from mainland Chinese investors – the longest such streak since 2018 (although yuan weakness may be part of the reason).

Investors globally, however, were more interested in growth and trade troubles. The S&P 500, Nasdaq, FTSE 100, EURO STOXX 50 and Japan’s TOPIX generally finished the five-day period flat or a little down, but several suffered their worst trading day of 2019; the three leading US indices fell by 3% on Wednesday.

J.P. Morgan said last week that the next rounds of US tariffs – due in September and December – will test China’s capacity to keep growth from slipping into a lower gear. Last week, the White House indicated around half the September tariffs package could be deferred; then the US president warned that troubles in Hong Kong would impact the outcome of trade talks; and China said it would introduce retaliatory tariffs when the next round of US sanctions are introduced on 1 September. Markets duly rose and dipped in response. Meanwhile, South Korea removed Japan from its list of trusted trading partners (pushing down South Korea’s won to an 8% dip versus the dollar this year); and North Korea conducted further missile tests.

Such tensions over trade and security might have been just about manageable for investors, were it not for the fact that the global economy is delivering ever more signs that it needs all the help it can get – not least among some of the world’s leading exporters. Last week, July industrial output data for China, the world’s largest exporter, came in at just 4.8% (annualised), its slowest rate in 17 years; fixed investment, housing starts, credit growth and retail sales all show signs of losing momentum, too.

Meanwhile, in Germany, the world’s third-largest exporter (and its leading car exporter – see chart below), GDP shrank by 0.1% in the second quarter. There are growing fears, and increasing numbers of forecasts, that the quarterly contraction will not prove to be a one-off; if Germany is tipping into recession, the implications for the eurozone more broadly could be severe. Moreover, Allianz Group argued last week that China faces a greater economic risk from an EU recession than from the US trade war. Finally, the results of an indicative vote in Argentina’s presidential election delivered the highest percentage to the – generally spendthrift – opposition. In response, the peso dipped by a quarter against the dollar and Argentinian stocks fell 37%.

Raw data should move investors more than trade threats and, sure enough, the news about China and Germany pushed down the yields on government bonds, as investors fled to safety. (Yields move inversely to prices.) Yields on ten-year US and UK government debt fell below the yields on short-term debt for the first time since the global financial crisis. Moreover, the yield on 30-year US government debt dipped below 2% for the first time in recorded history. Markets are now pricing in four interest rate cuts by the Federal Reserve over the coming 12 months. (The White House is also looking at offering its own helping hand in the form of further tax cuts.)

Amid all these headwinds, there was still a handful of earnings results to celebrate, not least for Walmart, Alibaba, Nvidia and Tencent; although Macy’s, Deere & Company, and JCPenney offered less happy news. Perhaps above all, however, bank stocks are getting a rough ride, shedding value on global markets as growth stalls and interest rate cuts proliferate. By some definitions, US bank stocks are now in a bear market.

The risk-off mood comes at a sensitive time for the UK, its future currently suspended in aspic while parliament is in recess. However, domestic politics was more than lively last week, culminating in Jeremy Corbyn’s offer to head up a temporary alternative government – by way of coalition following a no-confidence vote in the current administration. (Corbyn said the new administration would then block a no-deal Brexit and quickly call a general election.) With varying degrees of reluctance, leaders of anti-Brexit parties left the door ajar for the possibility, should it prove necessary; although he looks set to struggle to get the numbers he would need.

The options under pension freedoms are more popular than ever, despite warnings from experts that people might not fully understand the risks they are taking.

New figures from HMRC show that £2.75 billion was withdrawn between April and June, a 21% rise on the same period in 2018.1

The allure of pension freedoms has continued to spur withdrawals. Over 300,000 have now accessed their pension pots and withdrawn funds, perhaps to cushion their transition into retirement, or to fund lifestyle choices.2 In doing so, many risk burning a black hole in their finances or running out of money in full retirement. Perhaps worryingly, over half of those withdrawing said they could live comfortably without the extra cash.

Taking anything beyond the 25% tax-free cash entitlement from your pension can trigger a host of unintended consequences. Emergency tax codes imposed on lump sum withdrawals have caused a surge in tax claims since freedoms were introduced in 2015. Withdrawals are expected to pass the £500m mark in the third quarter.Early withdrawals can see your annual pension savings allowance cut to £4,000 per year. This compares with the standard annual allowance of £40,000.

“While it may be tempting to dip into your pension early, it’s probably better to leave the money where it is,” says Tony Clark, Head of Retirement Marketing at St. James’s Place. “If you need to plug an income gap, then talk to your financial adviser. They can recommend the most tax-efficient course of action.”

1. PensionsAge, 31 July 2019
2. Ibid
3. Adviser Points of View, 14 August 2019

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

 In The Picture

As the global economy slows, pressure on trade is one of the trends pulling it downwards most strongly. Germany’s latest growth figures reflect, in part, disappointing demand for its signature export: the car.


 The Last Word

Denmark essentially owns it. We’re very good allies with Denmark, we protect Denmark like we protect large portions of the world. So the concept came up and I said, ‘Certainly I’d be [interested].’ Strategically it’s interesting and we’d be interested but we’ll talk to them a little bit. It’s not No1 on the burner, I can tell you that.
Donald Trump, speaking to press this week about his interest in buying Greenland


The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

© S&P Dow Jones LLC 2019; all rights reserved

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

You may also like

St. James’s Place Insights

Week Watch | 30 November 2020

Stock Take Global markets are on track for their best month ever, after the announcement of several vaccines to fight COVID-19 and the election of

Read More »

We use cookies to analyse how visitors use our website and to help us provide the best possible experience for users. By continuing to use our site, we will take that as your consent to allow us to use cookies. However, you can disable cookies at any time if you wish.