Guy Foster, head of research at Brewin Dolphin, gives a breakdown on how certain sectors will be affected by weak European activity, geopolitical risks and the Brexit stand-off.
Despite fears raised at the end of 2018 the US economy still seems to be on a reasonably firm trajectory. Ambiguous data have caused some turbulence, but the underlying trend seems robust.
US retail sales rebounded but their weakness in December remains unexplained. March's colossal miss on employment growth is in conflict with other data, although most surveys show a modest reduction in labour demand.
European activity remains weak, but the declines slowed in most markets with Germany increasingly standing out as the main area of weakness. Tailwinds for Europe from fiscal policy, energy prices and Chinese stimulus are starting to build.
Monetary policy is, in some ways, looser in the US, Europe and China, however the liquidity conditions are still much tighter in 2019 than they were in 2018.
There were further defeats for the Prime Minister's Brexit deal, but more significantly indicative votes revealed that no alternative vision has a majority either. The potential for further votes remains but minorities within parliament are engaged in a Mexican stand-off.
The yield curve inverted according to one measure. The yield that can be locked in by investing in three-month securities rose above that receivable on ten-year securities.
This very unusual situation indicates that investors believe current interest rates are above the level that will be receivable over the long-term or, to put it another way, interest rates are more likely to fall than rise from here.
The allocation to Japanese equities was reduced in order to increase the exposure to European ex UK equities. European stocks have underperformed for a long time while the economy has laboured. Now the potential for European growth to exceed US growth is building, as Europe will benefit if Chinese demand recovers.