Mark Slobom, IFA, Harpenden reviews recent equity market volatility

Tuesday 6 February, 2018

Mark Slobom our independent financial adviser in Harpenden reviews why the US equity market has fallen and the impact on other global equity markets.

Why is the US equity market experiencing heavy falls?

The US equity market has experienced heavy falls since a better than expected US jobs report on Friday 2nd February 2018 suggested that the US Federal Reserve may have to raise US interest rates faster than expected to stabilise the US economy.  Overnight on 6th February 2018 Asian equity markets also fell as many Asian economies depend on the US for growth.

Mark Slobom, Chairman of the Investment Policy Committee and member of the Harpenden financial planning team said:

'It is really important to put these recent equity market falls into context and understand why they are happening now.  It is actually positive news that has caused the recent fall.  The US economy continues to grow and this means that inflationary pressures, (the cost of buying things) is also increasing, so the US Federal Reserve may now have to raise interest rates faster than was originally expected.  Companies have benefited from this low interest rate environment but investors get concerned when company borrowing costs increase.’

Mark Slobom, independent financial adviser Harpenden continued:

‘Despite the fall in equity markets we are still positive on the outlook for global economic growth.  This correction should be viewed within the context of recent equity market gains.  Most equity markets have provided excellent returns for investors since the financial crisis, and the US equity market was particularly strongly in 2017.  Our clients are understandably concerned about the current equity market volatility.  However, we always recommend our clients maintain a long-term perspective when they invest, and we prepare them for short-term setbacks and this type of volatility.’

Under new Mifid II regulations we are obliged to contact clients invested in a Vestra Governed portfolio if their portfolio falls by more than 10% in one day.  Below is an example of an email you would receive in this circumstance.


Dear

Due to Mifid ll regulation we are required to notify you that part of your portfolio with Vestra has fallen in value by more than 10%. This does not necessarily mean that your total investment portfolio has fallen by more than 10%.

Investment markets may remain volatile in the near future and further communication may be issued. It is important that you speak to your financial adviser before taking any action.
Please note that this is a centralised communication, and therefore we apologise for the lack of personalisation.

We have to notify you within 24 hours and therefore we have done this via email. 
If you want to discuss this matter further please contact your financial adviser.

Yours Sincerely,

Simon Hawker
Compliance Officer Lonsdale Wealth Management

 

Mark Slobom, independent financial adviser Harpenden

Mark Slobom, independent financial adviser Harpenden

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