THE INVESTOR CENTRE
THE INVESTOR
|
29
E
vents in Europe and the ongoing
weakness in the price of oil were the
main in uences on the market in January.
As had been widely expected, the ECB
announced that it would undertake full-
blown QE starting in March and continuing
for at least 18 months.The scale of the
programme was, however, considerably
larger than had been expected; European
equities rose on the news, while bond yields
fell to record lows.Also in Europe, the
victory of the radical left-wing Syriza party
in Greece dominated headlines towards the
end of the month. February was a strong
month for equity markets. In the UK, the
FTSE 100 recorded a new peak, exceeding
the level reached in 1999 at the height of the
tech bubble, while in Japan theTopix rose to
its highest point in 15 years. In the US, Janet
Yellen, chair of the Federal Reserve, indicated
that the rate-setting body was not yet ready
to raise interest rates. Investors were also
encouraged by better economic data out of
the eurozone and a temporary solution to the
negotiations with Greece.
G
DP grew by 0.5% in the fourth quarter
(quarter on quarter), compared with
0.7% in the quarter before. For 2014 as a
whole, GDP was 2.6% higher than in 2013.
While slightly below expectations, annual
growth is at its strongest since 2007.The
Bank of England’s (BoE’s) Monetary Policy
Committee voted unanimously to maintain
the interest rate at 0.5%.Mark Carney has
written the rst open letter from a BoE
governor to explain why in ation is too low
rather than too high, and he expects to have
to write a fewmore this year. CPI in ation
fell to a record low in January, rising by
just 0.3% over the previous year, which
was down from 0.5% in December.The
month-on-month change of -0.9%was the
largest monthly drop since January 2001,
with the falling price of motor fuels and food
being the main contributors to the fall in
in ation.The BoE reiterated in its February
In ation Report that in ation may dip below
zero sometime in the rst half of the year.
Unemployment continued to fall and the
unemployment rate fell to 5.7% in the fourth
quarter, compared to 6% in the prior three
months.The gap widened between wage
growth and in ation, with pay in the nal
quarter of 2014 rising 2.1% higher than a
year earlier.
Nimish Patel and Eleanor de Freitas
BLACKROCK
Core manager: Global Equity
Record peak for FTSE 100 as equity
markets show strength
BLACKROCK
Index Linked Gilts
Falling price of motor fuel and food
the main contributors to record low
TheECBannounced
that itwouldundertake
full-blownQE
In ationmaydipbelow
zerosometime in the
rst half of theyear
Francis Rayner
U
K equities rose in Q1 as the ECB’s QE
programme and positive European
economic indicators improved investor
con dence. In the US, data continues to
show economic growth, although there are
some signs that growth is moderating.The
portfolio began 2015 with positive relative
performance driven by holdings in Shire,
which delivered strong revenue growth
and beat market pro t expectations, and
Wolseley, given its signi cant exposure to the
US economy and currency. Global catering
group Compass also bene ted fromUS
economic strength and reported positive
trading. Sky rose, despite paying more than
expected to secure the majority of the 2016-
2019 English Premier League broadcast
rights, while the portfolio’s underweight
exposure to the oil and gas sector helped
relative performance.The main detractor was
Johnson Matthey. In addition to the timing of
interest rate increases in the US and the UK,
the uncertainty surrounding the number of
potential outcomes of the general election
may provide a further source of volatility for
UK equities. In ation is expected to remain
modest, aided by a lower oil price, while
economic growth in the US, the UK andAsia,
and the potential for recovery in Europe, is a
positive backdrop for corporate earnings and
equity valuations.
BLACKROCK
UK & General Progressive
Positive start to the year for portfolio
thanks to exposure to US currency
In theUS, data
continues to show
economic growth
Luke Chappell
