Market Update

During periods of strong market performance, like the one we’ve experienced since the end of last year, it’s important to remember that markets ebb and flow over time. Since December 31, 2012, Lexington can confirm that the FTSE All-Share Index has gained 10.7 percent and the Standard & Poor’s 500 added 8.8 percent. Last week, the FTSE All-Share reached highs last seen during 2007, and the S&P 500 ended the week less than one percent from its record high, which was also realised during 2007.

While the strong performance of UK stock markets has given investors reason to smile, significant economic challenges remain. The effect of sequester spending cuts on the American public and economic growth remains relatively unknown. Also, UK & U.S. earnings growth appears to be slowing and that could affect stock prices. (Earnings are a measure of a company’s profitability and influence its share price.)

Global markets were largely up last week, too, as investors seemed to celebrate stronger U.S. and Chinese economic data, as well as the fact that Central banks in Europe, the United Kingdom, Australia, Japan, and Canada met and left their monetary policies unchanged.

In the Eurozone, economic growth remained relatively weak and inconsistent. While the European Central Bank has stepped up to help countries affected by poor demand for bonds, insufficient bank-to-business lending has negatively affected economic growth, especially in southern Europe, leaving some countries mired in recession.