03 July 2018 ( Lagos ) : It has been an interesting first half for 2018. Economic fundamentals and politics took center stage as both fought for market influence. The Federal Reserve is in tightening mode as growth and inflation trended higher, while the trade war between the US and the rest of the world particularly with China and the EU intensified further.

In parallel to these events the US administration provided massive stimulus to an economy that is already near full employment which led to further strengthening of the US Dollar.Looking at the big picture, strong economic growth in the US, despite signs of softening elsewhere, provided support for equities. However, geopolitical uncertainty and protectionism remained the key downside risk. 

We think that we’re in the late stage of the current economic cycle, but there are no signs of a recession yet. In such economic conditions equity investors should be more cautious when investing. A more selective approach is needed as valuations are likely to be further challenged in the months ahead as volatility is further elevated.

Source: Hussein Sayed, Chief Market Strategist at FXTM 

Reporting for EasyKobo on Tuesday, 3 July 2018 in Lagos, Nigeria