| 27 January 2009 | Back to black? Two important pieces of fundamental data affected oil price this week, a U.S. government report showed a bigger-than-forecast gain in crude stockpiles, and weak corporate earnings and economic data signalled a deepening global recession and reduction in demand for oil. In simple economic terms, where supply outstrips demand, prices fall.
In the short term, the dip from current levels may continue as supply is reduced by oil producing countries and stockpiles remain strong. However, once equilibrium is achieved and demand is managed, it is envisaged that levels could reach $50 per barrel by mid year returning to $64 in perhaps 12 months.
Past performance is not an indicator of future returns
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| 27 January 2009 | Go defensive? The tone set early in 2009 is that global equity markets have experienced a “sell off” pushing equities indices lower. On Friday the UK Government announced that the economy had shrunk by 1.5% in Q4 2008, the largest contraction in more than 28 years. But when investors look closer there are particular sectors which have traditionally performed well under these tough economic conditions. The latest research from Barclays Wealth “Signpost” suggests that investors should remain cautious and adopt a defensive stance when choosing their investments, particularly for the first half of 2009 whilst the UK economy is tipped to remain in deep recession. “We are maintaining our defensive stance in the portfolios for the first part of the year and have actually reduced our cyclical exposure for the short term. We focus on stocks which have strong balance sheets and solid yields” (Source: Barclays Wealth Signpost Equities, One Step at a Time) Defensive sectors such as healthcare, pharmaceuticals, consumer staples and telecoms have continued to perform well against a backdrop of negative growth in other more aggressive and cyclical sectors. The rationale for this is straightforward, even in an economic downturn; the demand for basics remains the consumer’s priority. The graph below shows the performance of defensive sectors last year relative to the market.
Past performance is not an indicator of future returns So what should you look out for?
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| 23 January 2009 | Time to invest in the US? Further to our ViewPoint on the 14 January ‘Is the US recovery imminent?’ (see below) we published a web poll to gauge your views on investing in the US market:
Barclays Wealth research predicts growth of over 15% in the S&P 500 in 2009 and a further 9.3% in 2010 – Login to the Research Centre to read the latest Barclays Wealth Signpost. Obviously, no one can know with certainty what will happen but if you consider that there are good growth opportunities in the US you may want to consider the iShares S&P 500 (IUSA) which offers you exposure to the top 500 US blue-chip companies. ETFs are traded like shares and may not be for everyone. They closely track the performance of an index and as such their value can go down as well as up and you may get back less than you invested.
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| 19 January 2009 | Are there alternatives to the Retail Gloom? Retail sales figures were as gloomy as expected last week with reported pre-Christmas sales the worst for 14 years and high street retailers still under pressure. Even Tesco who despite announcing profits - like-for-like sales (excluding fuel) grew 2.5% in the seven weeks to 10-January in line with market forecasts – were reported negatively across the press. (“Tesco Christmas sales slowest since early 1990s” -Telegraph 13-Jan). The news was expected and the outlook for the retail sector is currently poor. So what sectors are showing resistance to the down weight? Telecomms, pharmaceuticals and Healthcare look to be the most obvious defensive sectors. Other winners could be the home and light entertainment sectors with Sky – the home entertainment giant poised to take advantage of the fact more people are staying in. Similarly bookmakers William Hill who last week said the gross win was 8% higher in the 11 weeks since October 20th than the corresponding period of 2007. So it doesn’t all need to be doom and gloom, there might be some buying opportunities you just need to keep looking. Need some inspiration? |
| 19 January 2009 | Sterling weakness v Dollar strength A lot of economic data out this week with Q4 2008 UK GDP figures due to be published on Friday. With some analysts suggesting a 1.2% quarter on quarter contraction for the UK economy it suggests Sterling could weaken further as the UK economy is officially regarded as in recession. Conversely, the US dollar has strengthened in recent weeks as investors look to ‘safer’ currencies and reduce their exposure to emerging markets. This seesaw approach is likely to continue through 2009 and while generally speaking it bodes for tougher economic times for consumers it allows investors and traders alike to speculate from these fluctuations in currency demand. FX on BARXdirect allows clients to speculate on the movement of currencies and also offers the benefits of institutional level research to help clients hone their trading strategies.
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| 14 January 2009 | Is the US Recovery imminent? When the US sneezes, the rest of the world catches a cold, which illustrates the global dominance of the US market. So the impact of the credit crunch and economic slowdown in the US has been the principal factor in causing a global recession. The US entered recession very rapidly, and pundits are speculating that the exit could be just as rapid. This is due mainly to the significant fiscal stimulation packages put in place by the Bush presidency and the vast public expenditure and economic support programmes being established by Obama. Hence, there is widespread speculation that the US will emerge from recession in 2009. Given that stock markets predict future value, commentators expect the US principal equity index, S&P 500, to rise significantly this year. Barclays Wealth Research suggests it will be 15% in 2009 and a further 9% in 2010. Download the latest Signpost for more detail – to do this login to your account and select the 'Signpost' link within the Barclays Wealth Insight box under the Research centre tab. Of course, no one can guarantee if and when any recovery will kick in but if you want to diversify your portfolio with access to the US market in order to benefit from the chance of the predicted growth, you may be interested in either of these products. Please remember that if you are in any doubt when selecting your investments, you should seek independent investment advice as you could lose money as well as gain. |
| 14 January 2009 | Replacing Interest in your portfolio? Choose from individual gilts and corporate bonds or diversify your exposure over a range of issuers by investing in a bond fund or the iShare Corporate Bond (SLXX)
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| 09 January 2009 | Darkest before dawn? As we begin 2009 facing recession and many well known high street retail brands disappearing, could there be some truth in the adage that it is “darkest before dawn”? No-one knows how long the recession will last but if you’re anticipating an imminent recovery in the UK, then the iShares FTSE 100 could be for you. Alternatively Covered Warrants allow you to leverage your upside with limited risk; you can lose no more than your initial investment. Please remember the value of investments can fall as well as rise.
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