This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
It may have been one of the toughest (and exciting) starts to the year for financial markets in a long time, however, those brave enough to call a bottom on certain stocks in Jan and Feb will have done very nicely indeed. In fact, as we write the UK Index index is sitting only 2% from where it began the year compared to losses of almost 12% at one point. A significant recovery I’m sure you’ll agree. And while we may be in a tight sideways channel at the moment, this could be merely a prolonged pause before a breakout to the upside to extend the rally from the lows of the year. So who won and lost in Q1?
It was the depressed mining sector that delivered the stellar gains in the Jan-Mar period with the likes of industrial metals miners Anglo American (AAL; +84.4%) and Glencore (GLEN; +73.9%) benefiting from a recovery in the price of Copper while precious metals miners Randgold Resources (RRS; +53.8%) and Fresnillo (FRES; +34.5%) did well on revived interest in both Gold and Silver. Even some of the UK supermarkets troubled by market-share grabbing German discounters managed to top the list with Tesco (TSCO; +28%) in continued strategy turnaround mode and Morrison (MRW; +34%) being re-promoted to the premier league for UK stocks. Whether they carry on north or are set to suffer from profit taking remains to be seen.
Have we seen a bottom for the commodities? Are the overinvestment-led supply gluts a thing of the past? China may be growing more slowly, but at an enviable rate for any developed nation. Global growth is still positive. Perhaps pessimism and the sell-offs went a little too far. This is very possible when you look at the sharpness of the rebound in some of these stocks. And now we know that global central bank policy is set to remain highly accommodative and interest rates low for a good while longer. We thus have a setup which is rather positive for risk appetite and allows us move into a second quarter which has the potential to carry on where the first one left off.
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Mike van Dulken, Head of Research, 1 April
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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