Funds

Market Review

Market Review Summary for quarter 2 2008 from AEGON Asset Management

 

Summary

• The US market fell due to concerns about a potential recession.
• After a positive start, the UK equity market fell throughout mid May and June.
• European equities fell due to concerns over inflation
• Gilt yields rose between 0.29% and 1.4% across the curve

United Kingdom - full commentary

• The UK equity market fell, due to a decline in May that continued almost without interruption in June.
• The best performing sectors were oil & gas, mining, pharmaceuticals and electricity.
• We are cautious on the outlook for the UK economy and anticipate material earnings downgrades for UK equities in 2008.

USA - full commentary

• The US market fell due to concerns about a potential recession.
• The best performing sectors were energy and utilities while the financial sector performed very poorly.
• We are cautiously optimistic on the outlook for US equities over the remainder of the year.

Europe - full commentary

• European equities fell due to concerns over inflation.
• Financial and consumer facing sectors were among the worst performers, while the oil & gas and basic materials sectors were the standout winners.
• We expect markets to be range bound over the summer months as investors continue to grapple with earnings downgrades.

Japan - full commentary

• In sterling terms, the FT Japan index increased in the second quarter.
• Oil, paper, steel, shipping and trading companies performed best as the oil price increased.
• Japan should offer a safe haven if global inflaion rises, yet if global activiy slows rapidly then Japan's exporters will suffer.

Far East - full commentary

• Regional markets fell as high oil prices impacted the energy intensive economies of Asia.
• The Philippines and India were the worst performing countries while Australia performed well and posted the smallest decline.
• Until the dilemma of slowing exports and growth but rising fuel costs and inflation is resolved, markets will continue to be volatile and a cautious stance is warranted.

Fixed Interest - full commentary

• In the second quarter of 2008 gilt yields rose between 0.29% and 1.4% across the curve.
• The Bank of England Monetary Policy Committee (MPC) cut base rates once during the quarter by 0.25% in April, reducing the rate to 5%.
• We expect base rates to remain stable over the next quarter as increasing inflationary pressures are negated by weakness in consumer spending and the housing market.