Hello, we hope that you all had a Merry Christmas and a Happy New Year.
After stocks rallied at the beginning of 2020, a more cautious tone was felt across global financial markets as geopolitical tensions continue to escalate between the US and Iran. Crude oil prices spiked on Thursday night, closing near $70 per barrel, following news that an Iranian general had been killed in a US Airstrike at Bagdad’s airport that was authorised by President Trump. Amid exacerbating tensions between the two nations, investors are more risk-off in the short term as safe-haven assets such as Gold and Government debt will see an influx with markets pricing in a potential retaliation from the Iranians.
This being said, the equity rally, which has continued into the new year, has not been impacted severely. Although downside risks have increased, and gains are expected to stall in the near term paired with increased volatility, portfolios are not exposed to oil-sensitive investments minimising any major swings in equity performance. Portfolios remain diversified and are designed to minimise exposure to risk amid an environment of continued uncertainty and subdued global economic growth.
Given current market conditions, we continue to monitor portfolios closely and continue to seek opportunities to reduce downside risks.