Mixed messages on the investment front Despite the UK commercial property market notching up another month of gains, with property yields averaging 5%, the Investment Association’s latest figures showed the largest outflow from commercial property funds in February 2016 since 2008. However, given that property is uncorrelated to bond and equities, the sector remains a favoured home for funds for the diversified investor, as Gilt yields remain below the 2% mark. Although price movements in the asset class have shown signs of slowing, the income stream derived from this sector can be regarded as a positive investment motivation.

Possible ‘Brexit’ weighs on the market

The Royal Institution of Chartered Surveyors (Rics) have reported that since the announcement to hold the EU Referendum, they have seen a decline in international demand for UK based industrial, commercial and retail property, primarily because companies are delaying investment decisions until after the outcome. They state that in their recent survey of members, only 5% have seen an increase in interest in the sector from overseas buyers. This compares with a 36% increase in interest in Q2 2015. Of those canvassed, 38% of Rics members cited the uncertainty surrounding the referendum as the main cause of this decline. The Chief Economist of Rics, Simon Rubinsohn, was quoted as saying: “There is no doubt that since the EU referendum became a certainty following the General Election last May, we have seen a decline in interest from overseas investors in UK commercial property. At least in the short- term, we know that international retailers and service providers are finding the UK market less attractive.”

Markets – April (Data supplied by The Outsourced Marketing Department) Following the IMF downgrade for global growth, equity markets were relatively unmoved as growth expectations had already been marked down. Most economists had previously downgraded their forecasts in response to weaker growth in both the US and Japan, combined with ongoing concerns over the emerging markets, uncertainty over the EU Referendum and commodity prices. As commodity prices firmed up and business surveys picked up, the outlook brightened somewhat. With growth and inflation continuing to disappoint, central banks are under increasing pressure to add further stimulus.

In the UK, the FTSE100 gained 235.4 points or 3.8% to the month’s high of 6410.30 (20 April), losing ground in the latter days of the month to finish April at 6241.90, a modest month-on-month rise of 1.1%. The wider FTSE250 lost 0.7% over April, to close the month at 16,801.60. The junior AIM gained 2.4% over the month to close on 727.70. Across the pond, the Dow Jones index gained a mediocre 0.5% during April to close the month on 17,773.64. The NASDAQ, heavily influenced by technology stocks, fared worse losing 94.49 points to 4775.36 a fall of 1.9%. On 28 April, Fed officials voted to leave monetary policy on hold, opting not to guide towards an imminent hike in interest rates. Their statement reflected a slight improvement in the economic outlook as they removed the reference to global developments continuing to pose risks. On the continent, the Eurostoxx50 experienced a three month high of 3151.69 (21 April), however ended the month gaining just 23.28 points to 3028.21, an advance of 0.8%. In Japan, where government debt continues to rise and the budget deficit remains high, the Nikkei225 index lost 0.6% to 16,666.05. In a surprise move, on 27 April the Bank of Japan chose not to increase stimulus efforts against market expectations. In currency markets, the US dollar finished the month at $1.45 against sterling and the euro closed at €1.27 versus sterling. Oil had a good month, Brent crude ended April up 17.5% to $47.39 a barrel. Gold also experienced positivity with the metal rising +4.9%, to close at $1,292.87 a troy ounce. Download full report here

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