Why we need to remain vigilant on UK equities

UK equities had a positive start to 2019. While this can be partly viewed as a rebound after 2018's difficult final quarter, what is likely to have been most significant is an extraordinary U-turn by the US Federal Reserve.

As recently as December, investors were being led to expect that US central bankers would make several 0.25% increases to interest rates this year, coupled with a continuation of quantitative tightening at a rate of up to $50bn each month. However, after a period of heightened volatility in stockmarkets, the Fed appears to have recognised the risks associated with driving these policies forward, particularly in tandem, and signalled a more dovish approach, which led to a bounce in markets around the world. The U-turn undoubtedly buoyed UK equities but, largely as a consequence of the ...