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Month: March 2021

Market Update 29/3/21

Shares in Europe rose on hopes of an economic recovery, turning around previous losses resulting from concerns about added restrictions to curb the spread of the coronavirus and the European Commission’s (EC) threat to stop vaccine exports. In local currency terms, the pan-European STOXX Europe 600 Index added 0.85%. Major stock indexes were mixed: France’s CAC 40 ended the week down modestly, while Italy’s FTSE MIB, Germany’s Xetra DAX Index, and the UK’s FTSE 100 Index posted gains. Elsewhere, UK inflation took a surprise dip and one of the world’s biggest container ships blocked a major trade route, the Suez Canal.

Core and peripheral eurozone government bond yields fell over all. Concerns over Europe’s sluggish vaccine rollout amid the onset of a fresh wave of coronavirus infections drove demand for high-quality government bonds. Data showing an EUR 7.1 billion increase in the European Central Bank’s weekly bond purchases also weighed on yields. Gilt’s yields fell on worries the EC could block vaccine exports to the UK, potentially slowing down the country’s vaccination campaign. Weaker inflation data, which pushed out expectations of the Bank of England to tighten up its monetary policy, also led to lower yields.

The major US indexes have been mixed for the week, as investors seem to continue to weigh a positive outlook about reopening against inflation and interest rate concerns. Small-cap stocks lagged for the second consecutive week, signalling a potential pause or turn around in their recent market position. Likewise, communication services stocks fared worst within the S&P 500 Index, dragged down by sharp declines in shares of several traditional media companies following a stretch of strong performance.

Inflation data – perhaps at the top of the list of current investor concerns – remain muted. The personal consumption index (excluding food and energy) increased by 1.4% year-on-year in February, down from 1.5% in January and still well below the Federal Reserve’s 2% target. On Wednesday, both Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen testified before Congress that they saw little danger of an overheating economy.

The yield on the 10-year U.S. Treasury notes fell much of the week, but seemed to rise in response to Thursday’s claims data. Stability in the yield of the notes boosted the performance of high yield bonds. However, the asset class experienced some weakness due to growing virus concerns throughout Europe.

Japan’s stock markets suffered considerable losses, even though they were able to recover some lost ground later in the week. The Nikkei 225 Stock Average fell 2.1% while the broader TOPIX gave up 1.4%. The yen weakened, closing at just below JPY 110 compared to the US dollar. The yield of the 10-year Japanese government bond ended up the week lower, at 0.08%.

Chinese stocks recorded a weekly gain, thanks to a rally on Friday after the country’s central bank signalled it was not about to tighten monetary policy. The Shanghai Stock Exchange Composite (SSEC) Index rose 0.4% to 3418.3, while the large-cap CSI 300 Index ended up 0.6% at 5038.0, its first weekly gain after five straight weeks of losses. Since reaching a record high on February 18, the CSI 300 has fallen 15%, while the SSEC is 8% below a 5 1/2- year high also touched on February 18. In China’s bond markets, the yield on the sovereign 10-year bond closed at 3.22%, off four basis points from the previous week, amidst expectations that monetary policy would remain supportive in the near term.

The fiasco in the Suez Canal reigned over commodity markets last week and will do so this week as oil prices kicked higher again on Friday, copper and gold rose, as did iron ore. The Suez blockage saw US West Texas Intermediate crude rise 4.1% to $US60.97 a barrel on Friday while Brent crude in Europe was up 4.04% a barrel to $US64.43. But for the week WTI fell 1.1% and Brent eased 0.4%. Gold rose 0.4% to $US1,732.30 on Friday, but shed 0.5% for the week for the first negative week in the last three.

How will you divide your wealth? 

There is no easy way to say it – anticipating ones death is an uncomfortable topic. Yet it is often worth pushing past the initial discomfort to pursue the potential rewards of effective wealth transfer planning. There are three places your assets can go at your death: to your family and friends, to charity or to the government in the form of taxes.

Almost half of all Baby Boomers say they have enough personal wealth that they can afford to gift some of it away during their lifetime, new research shows[1]. The figures, collected by YouGov show that 48% of Baby Boomers say they could afford to give money to family members before they die. Less than a third (29%) ruled it out, and 26% say they are unsure.

Larger one-off wealth transfers

Of those who say they can afford to make lifetime gifts, 40% say they would favour multiple small gifts and a third (33%) would prefer larger one-off wealth transfers. A further 30% are unsure which would better suit their needs.

Despite the large number of people who estimate they can afford to pass some of their savings and assets to family members, government statistics suggest only between 31% to 39% of people aged 50-69 have ever given a financial gift. And just a small minority appear to have a plan for regular annual gifting, with just 15% of 50-59-year-olds having gifted in the last two years.

Intergenerational financial advice

The statistics reveal the importance of wealth transfer planning and lifetime gifting advice. It is estimated that around £5.5trn of intergenerational wealth transfers will occur over the next 30 years[2]. An effective plan can lessen the likelihood of family conflict, reduce estate costs, reduce taxes and preserve wealth.

Obtaining professional intergenerational financial advice will increasingly become a key part of financial planning for the Baby Boomer generation. This generation has accrued significant personal wealth, having benefitted from rising house prices, stock market growth and the higher prevalence of generous pension schemes, and they want to give younger generations a financial boost.

Lifeline for some younger people

In contrast, younger generations often find themselves facing high house prices and the need to make significant personal contributions to their Defined Contribution pensions in order to secure a decent retirement fund.

Gifting between the generations will increasingly become a lifeline for some younger people as they struggle to get on the housing ladder, pay for school fees and deal with the ever-increasing expenses of living.

Careful balancing act to figure out

Passing on wealth to the next generation is one of the most important yet challenging aspects of financial planning. Its vital that helping the younger generations doesnt come at the expense of your own retirement funds and so there is a careful balancing act to figure out if you can afford it. If you can afford to gift, its vitally important to consider the various Inheritance Tax and gifting rules.

Despite this, there is still a clear gifting gapbetween the number of people who can afford to gift and those who actually have a lifetime gifting plan in place. Gifting is a great way to help you make the most of your financial assets and enjoy seeing your life savings helping your children and grandchildren.

Wealth transfer planning process

Establishing who gets what, how they get it, and when they get it, are, as a general rule, personal matters. But these decisions can have significant financial implications. Life events, as well as market and regulatory factors, can impact the wealth transfer planning process. Therefore, it is important for your wealth transfer plan to remain flexible and be revisited and adjusted periodically. Please contact us on +356 2157 6666 or email info@lawsonsequity.com to discuss your plans.

Source data:

[1] Research commissioned by Quilter and undertaken by YouGov Plc, an independent research agency. All figures, unless otherwise stated, are from YouGov Plc. The total sample size is 1,544 UK adults, comprised of 529 Baby Boomers, 501 Generation Xers and 514 Millennials. Fieldwork was undertaken between 07/07/2020 – 08/07/2020. The survey was carried out online.

[2] Passing on the pounds – The rise of the UKs inheritance economy. Published May 2019. Author: Kings Court Trust

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Weekly Market Update 19/03/21

Shares in Europe have changed little in the last week. Even though central banks maintained their policy to stand behind an economic recovery, worries about a revival in coronavirus infections in some countries have limited the upside. In local currency terms, the pan-European STOXX Europe 600 Index ended the week approximately flat. Major European indexes were mixed. Germany’s Xetra DAX Index gained 0.82%, while Italy’s FTSE MIB Index advanced 0.36%. However, France’s CAC 40 Index fell 0.80%, and the UK’s FTSE 100 Index fell 0.61%.

Core eurozone bond yields ended a little higher. Germany’s 10-year bund yield climbed midweek, tracking U.S. Treasuries in response to expectations for an uptick in inflation. Yields eased somewhat on Friday on worries about the escalating number of coronavirus infections in Europe and consequent constraints on economic activity. Outer eurozone yields largely tracked core markets. UK gilt yields also increased, lifted in part by the Bank of England’s (BoE) positive tone relating to the economic outlook and its decision to keep interest rates the same.

The BoE’s policymakers unanimously voted to keep the benchmark interest rate at a record low of 0.1% and to carry on its existing bond buying program. The central bank said that global economic developments “had been a little stronger than anticipated” last month and indicated the U.S. fiscal stimulus package should provide “significant additional support.” It said bond yields had increased to demonstrate the stronger recovery while observing that the prices of risk assets had held up.

The Bank of France (BoF) increased its 2021 forecast for economic growth to 5.4% from 4.8% and said that activity at the end of last year held up better than predicted. The new projections may prove conservative, as they assume coronavirus constraints remain through the first half of 2021.

The major US indexes continued to move to record highs early in the week but then lost ground as bond yields reached their highest levels in over a year. Energy stocks fell sharply as oil prices saw their biggest daily drop since the summer, seemingly driven by rising U.S. inventories and demand worries due to renewed lockdowns and the slow vaccine rollout in Europe. The increase in yields read well for banks’ lending margins and supported financial shares for most of the week, but the sector fell back on Friday soon after the Federal Reserve announced it was not extending an exemption put in place early in the pandemic that allowed banks to hold lower capital reserves. The small-cap Russell 2000 Index fell the most, giving back some of its leadership for the year to date.

The equity rally stalled on Tuesday morning after longer-term Treasury yields resumed their rise– over the next two trading days, the yield on the benchmark 10-year note soared roughly 17 basis points (0.17%) and hit a new pandemic-era high of around 1.75% before retreating slightly.

The performance of Japan’s stock markets was mixed over the week. The Bank of Japan’s (BoJ’s) announcement, it will limit its purchases of exchange-traded funds (ETFs) to those tracking the TOPIX, contributing to the index’s 3.13% gain. The Nikkei 225 Stock Average underperformed, returning 0.25%. The yen strengthened slightly, closing at just below JPY 109 versus the U.S. dollar. The yield of the 10-year Japanese government bond finished the week at 0.11%.

Chinese stocks fell for the week, with the Shanghai Composite Index slipping 1.4% and the large-cap CSI 300 Index shedding 2.7%. Chinese stocks underperformed other Asian markets on Friday after negative headlines about the first day of talks at the US-China meeting in Alaska, with each side criticising the other. The yield on China’s 10-year bond rose after the release of strong economic data for January and February, but fell on Friday to 3.26%, unchanged from the previous week.

In commodities, oil rose by more than 2% in volatile trading on Friday and ended the week by about 7%, the biggest weekly decline since October. Friday saw Brent Crude settle up $US1.25 a barrel, or 2%, at $US64.53 a barrel while in the US West Texas Intermediate (WTI) crude rose $US1.42, or 2.4%, to $US61.42.

Gold and copper rose on Friday as the US dollar weakened slightly in the wake of a fall in bond yields. Gold rose 1% over the week after a solid session on Friday (up around 1.4%) with the price settling at $US1,740.70 and then rising further in after hours trading to end the week at $US1,744.50.

Copper rose by around 0.11% to end at $US4.11 a pound and fell nearly 1.3% for the week while silver eased at the end to finish the week at $US26.335 an ounce, up around 1.3% over the five days.

How secure is the future of your family or business?

Projecting ourselves into the future to see whats around the next bend is not an easy thing to do

Given the current situation during this difficult and unsettling time with coronavirus (COVID-19), its important to think about how secure your familys or businessfuture would be in the event that you were no longer around. Understandably, we would rather not think of the time when were no longer around, but this crisis has highlighted the importance of protecting the things that really matter – like our loved ones, home, lifestyle and business – in case the unexpected happens.

The outbreak of the coronavirus may mean you have concerns about your life insurance and whether youre covered. If you have life insurance to provide for those left behind, or to cover business loans after your death, its important to keep paying the premiums, even if youre tempted to put it on hold to cut costs. You could lose your cover and may struggle to find the same level of cover if you start another policy later on.

Full replacement value

For many of us, projecting ourselves into the future to see whats around the next bend is not an easy thing to do. However, without thinking, we insure our cars, homes and even our mobile phones – so it goes without saying that you should also be insured for your full replacement value to ensure that your loved ones and business are financially catered for in the event of your unexpected death. Making sure that you have the correct type and level of life insurance in place will help you to financially protect them.

Life insurance provides a safety net. Ultimately, it offers reassurance that your family and business would be protected financially should the worst happen. We never know what life has in store for us, as weve seen in recent weeks with the outbreak of COVID-19, so its important to get the right life insurance policy.

A good place to start is asking yourself three questions: What do I need to protect? How much cover do I need? How long will I need the cover for?

Ask yourself

Who are your financial dependents – your husband or wife, registered civil partner, children, brother, sister, or parents?
What kind of financial support does your family have now?
What kind of financial support will your family need in the future?
What kind of costs will need to be covered, such as household bills, living expenses, mortgage payments, educational costs, debts or loans, or funeral costs?
What amount of outstanding business loans do I have now?

Financial safety net

It may be the case that not everyone needs life insurance. However, if your spouse and children, partner, or other relatives or business depend on you to cover the mortgage, other living and lifestyle expenses, or business loans, then it will be something you should consider. Putting in place the correct level of life insurance will make sure theyre taken care of financially.

Thats why obtaining the right professional financial advice and knowing which products to choose – including the most suitable sum assured, premium, terms and payment provisions – is essential.

No one-size-fits-all solution

There is no one-size-fits-all solution, and the amount of cover – as well as how long it lasts for – will vary from person to person. Even if you consider that currently you have sufficient life insurance, you may probably need more later on if your circumstances change. If you dont update your policy as key events happen throughout your life, you may risk being seriously under-insured.

As you reach different stages in your life, the need for protection will inevitably change. How much life insurance you need really depends on your circumstances – for example, whether youve had a mortgage, youre single or have children, or you have business loans that you are liable to pay.

Dont leave it to chance

Since the outbreak of COVID-19, some insurers are restricting cover for new applicants and have introduced new questions to their application forms. This has been done in order to establish and manage the insurance risks it poses. Planning for a time when youre no longer around may seem daunting, but it doesnt have to be.

Dont leave it to chance – speak to Lawsons Equity on +356 2157 6666 or email info@lawsonsequity.com for further information.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994.

Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Weekly Market Update 12/03/2021

Shares in Europe rose over the week as the U.S. prepared to inject a massive amount of fiscal stimulus into the economy and the European Central Bank (ECB) promised to buy more bonds to counter rising borrowing costs. In local currency terms, the pan-European STOXX Europe 600 Index ended the week 3.52% higher. Germany’s Xetra DAX Index climbed 4.18%, France’s CAC 40 advanced 4.56%, and Italy’s FTSE MIB gained 5.00%. The UK’s FTSE 100 Index added 1.97%.

Core eurozone government bond yields fell. The ECB announced it would accelerate bond purchases in the second quarter to suppress the recent rise in yields, pushing bond prices up. Fourth-quarter gross domestic product (GDP) for the region was also revised down slightly, further suppressing yields. Peripheral eurozone government bond yields largely tracked core markets. UK gilt yields also declined broadly. However, optimism coming from the UK’s vaccine rollout and the final approval of U.S. fiscal stimulus helped to moderate this decline later in the week. Better-than-expected January GDP data for the UK also supported gilt yields relative to other developed markets.

The ECB’s latest estimations call for EU GDP growth at 4% in 2021, an increase from the 3.9% expansion that the central bank forecast in December. The ECB also revised its inflation outlook to 1.5% from 1% for 2021 and adjusted its 2022 estimate to 1.2% from 1.1%. ECB President Christine Lagarde credited these adjustments primarily to “temporary factors and higher energy price inflation.”

UK economic output shrank 2.9% sequentially in January due to a sharp slowdown in the services sector, official data presented. Economists in a Reuters survey had forecast a 4.9% contraction, likely reflecting the new lockdown measures instituted at the start of the year. Exports of UK goods to the EU, excluding gold and other precious metals, fell 40.7% from the preceding month. UK imports from the EU tumbled 28.8%.

US Stocks moved broadly higher for the week, raising most of the major benchmarks to new records. Investors seemed to remain focused on fluctuating longer-term bond yields and the discount they place on future earnings, resulting in substantial swings in the technology-oriented Nasdaq Composite Index. Shares in heavily weighted automaker Tesla rebounded after the previous week’s sell-off, lifting the consumer discretionary sector. The small-cap Russell 2000 Index outperformed and extended its recent market leadership, ending the week up roughly 19% on a price (excluding dividends) basis for the year to date.

The week started out on a down note as the yield on the benchmark 10-year U.S. Treasury note stayed near one-year highs. Bond yields retreated over the following days, which seemed to provide a lift to sentiment. Tesla and other high-growth stocks that had sold off in previous weeks were particularly strong as interest rate fears abated. On Wednesday, the Labor Department reported that core (excluding food and energy) consumer prices had increased only 0.1% in February, slightly below expectations. Core producer prices, reported Friday, rose 0.2%, in line with expectations and well below January’s 1.2% jump.

The Nasdaq gave back some of its gains after Treasury yields bounced back Friday to end higher for the week. (Bond prices and yields move in opposite directions.) The broad municipal bond market posted strong gains through most of the week as cash flowed back into the market and new issuance remained relatively modest

Japan’s stock markets advanced over the week, with the Nikkei 225 Stock Average gaining 2.96% and the broader TOPIX Index up 2.89%. Japanese value stocks continued their strong outperformance relative to their growth peers, amid increased global interest in companies whose fortunes are closely tied to the economic cycle: The TOPIX Value Index has surged so far this year. The yen weakened to near a nine-month low, closing above JPY 109 versus the U.S. dollar. The yield of the 10-year Japanese government bond finished the week at 0.11%.

Chinese stocks posted a weekly loss as the Shanghai Composite Index fell 1.4% and the large-cap CSI 300 Index shed 2.2%. Despite recent weeks’ underperformance, investor appetite for Chinese stocks appeared undiminished. Net inflows into Chinese stocks have turned neutral for the first time since November, according to data from global custodian bank State Street, reflecting improving demand from China’s major trading partners and the country’s ongoing recovery. The recent weakness in Chinese stocks comes as Beijing appears to be focusing more on longer-term economic restructuring and financial deleveraging amid a strong post-pandemic recovery. In the bond market, the yield on China’s sovereign 10-year bond declined nine basis points to 3.27% for the week.

Commodities face another buffeting this week with the US Federal Reserve meeting, statement and forecasts very likely to send prices in all directions. Ahead of the meeting, last week saw oil prices fall, gold weaken, silver rise, copper remain solid and iron ore lose up to 5% by Friday’s close.

Global benchmark Brent futures fell 0.6% on Friday and West Texas Intermediate also dipped 0.7% for its first weekly decline in three weeks.Both Brent and WTI down slightly for the week after rising more than 10% over the past two. WTI settled at $US65.58 per barrel and Brent settled at $US69.20.

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

More over 55s forced to dip into their pension pot

Understanding the different ways you can use your pension money

An increasing number of pension savers have started to withdraw funds after many pressed pause at the start of the coronavirus (COVID-19) pandemic. The number of people taking only a tax-free lump sum has increased by 55%. Worryingly, the number of people withdrawing all of their pension in one lump sum increased by 94%.

Complex tax rules around pension pot withdrawals

Once you reach age 55 you can now access your pension pot. You can take some or all of it, to use as you need, or leave it so that it has the potential to continue to grow. In September 2019 the Government confirmed it would legislate to enact proposals to increase the minimum access age from 55 to 57 in 2028[1].

Due to COVID-19, many peoples incomes have been significantly reduced and so taking money out of their pension pot seemed like a quick cash-flow solution. But there are complex tax rules around pension withdrawals so people should be aware of the potential consequences.

Needing money after a change in circumstances 

While a tax-free lump sum can be withdrawn from a pension without incurring any tax liability, any balance withdrawn is subject to income tax. The number of people buying a guaranteed income for life (annuity) increased by 41%.

The increase in withdrawals is due to a combination of factors, including some people returning to withdraw after pausing earlier last year due to stock market volatility and some people needing the money after a change in circumstances.

Factors weighing on pension savers minds 

Data from August and September last year showed withdrawal levels got closer to levels seen in 2019 but many pension savers still resisted the urge to access their pension pots in the face of continued financial uncertainty. When you take your pension, some will be tax-free but the rest will be taxed. You need to be aware that tax depends on your circumstances, which can change in the future.

Stock market volatility, coronavirus (COVID-19) and employment prospects are just some of the factors weighing on pension saversminds when considering taking money out of their pension pot. Everyone is different and it is important to find the right solution for your circumstances.

Top 5 things to consider before withdrawing money from your pension pot:

1. Pensions freedoms: 

Familiarise yourself with the pensions freedoms so you are aware of your options. You can now do a lot more with your pension pot than previously. Everyone is different and it is important to find the right solution for your circumstances. What risks are you willing to take?

2. Saving requirements: 

Consider the amount of money you will need each month to maintain your lifestyle. Ask yourself: How much might I need? How much might I get? Do I still have a mortgage to pay off? What other sources of income do I have, and do I need my pension to keep up with inflation? Could I consider working for longer? Do I want to have annual holidays?

3. Costs later in retirement:

Think about costs later in your retirement. What will your living costs be in the future? Care needs are not a subject we are comfortable thinking about but it is important to have conversations about it with your family, as well as Powers of Attorney, Wills and inheritance.

4. Health and life expectancy:

We often vastly underestimate this, but evidence shows we are mostly living longer, with a growing variation in healthy life expectancy. If you have a partner, do you need to provide for them financially after you die, or are you relying on them?

Time to talk to us?

Few of us may expect to give up work altogether in our 50s. But a growing number of us are dipping into our pension before retirement age.Before we get into the different ways you could withdraw money, theres some more general things to think about first. Try asking yourself the following questions: How long will I need my money to last? How long do I want to keep working? How much tax might I pay? Could my health and lifestyle affect what I get? How much do I want to leave behind?

Whether you have plans to retire completely or want to scale down your work hours, there are now more options than ever to choose from when thinking about making your savings work for you. If you are considering accessing your pension it is essential that you receive professional financial guidance to enable you to make an informed decision. If you get it wrong you could end up with a  large tax bill. To discuss your situation or to find out more, please speak to Lawson’s Equity on +356 2157 6666 or email info@lawsonsequity.com for further information.

Source data:

[1] https://questions-statements.parliament.uk/written-questions/detail/2020-08-28/81494

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authoritys website.

Market Update 5/3/21

Shares in Europe ended higher this week, buoyed by the possibility that easing restrictions implemented to suppress the coronavirus’s spread and encouraging monetary and fiscal policies could set the stage for an economic recovery. However, growing expectations curbed gains that central banks would act to stem inflation. The pan-European STOXX Europe 600 Index rose 0.91% in local currency terms. Major stock indexes also advanced, while the UK’s FTSE 100 Index climbed 2.27% on the week, lifted by finance minister Rishi Sunak’s annual budget, which called for more fiscal stimulus, and the Office for Budget Responsibility’s forecasts that the economy would recover to its former size earlier than previously expected.

Core and peripheral eurozone bond yields rose as long-term inflation expectations strengthened. Doubt about whether the European Central Bank would act to suppress the increase in borrowing costs, combined with the Federal Reserve reiterating its pacifistic stance, gave yields another boost. UK gilt yields broadly moved higher, lifted by Sunak’s unveiling of the annual budget.

In his budget speech to Parliament, Sunak pledged GBP 65 billion of additional fiscal spending in a temporary tax and the short term break for business investment. He extended welfare payments and the jobs-support program until September. But most individuals will have to pay more tax over time, and corporate taxes would rise to 25% in 2023 from 19% currently.

The major US benchmarks finished mixed as longer-term interest rates continued their ascent. The rise in rates again weighed on growth stocks by increasing the discount on future earnings, while value stocks managed gains, according to Russell indexes. Within the S&P 500 Index, energy shares outperformed as oil prices hit their highest levels in over a year. Technology shares were broadly weak, while consumer discretionary stocks continued to be dragged lower by electric vehicle maker Tesla.

The US Treasury sell-off rattled on this week, intensified by assurances from Federal Reserve chair Jay Powell, the central bank would stick to its monetary policy and better than expected US non-farm payroll figures. The 10-year Treasury yield traded flat at 1.56% after popping above 1.61% to hit a 2021 high following the employment growth. The superstar US tech stocks continued to bear the heat with shares in Apple, Amazon, Microsoft and Alphabet losing more than 2% on Wednesday.

Japan’s stock markets produced mixed returns for the week, with the Nikkei 225 Stock Average dropping 0.35% and the broader TOPIX Index gaining 1.70%. The yen weakened and closed above JPY 108 versus the U.S. dollar. The yield of the 10-year Japanese government bond finished the week at 0.09%, its lowest level since mid-February, on dovish comments from the Governor of the Bank of Japan.

Chinese shares fell in choppy trade as rising U.S. yields and inflation expectations spilled into the country’s stock market. The large-cap CSI 300 Index fell 1.4%, while local currency A shares shed 0.2%. Technology shares fell in sympathy with recent highflying names related to consumers, electric vehicles, and property management. The yield on China’s sovereign 10-year bond rose to end the week at 3.36%, and the renminbi currency ended broadly flat against the U.S. dollar.

How soon China will normalise economic policy after the coronavirus crisis is a more urgent concern to investors. On Friday, China unveiled its official 2021 growth target of above 6%, a goal widely perceived as conservative. Beijing also decreased its fiscal deficit target to 3.2% of gross domestic product from 3.6% in 2020, as widely expected.

Oil prices rose sharply for a second day in a row on Friday, hitting their highest levels in more than a year, after the stronger-than-expected US jobs report and decision by OPEC and its allies not to increase supply in April. The surge took weekly gains to between 5% and 7% for Brent and West Texas Intermediate (WTI) crude as prices reached levels last seen in January 2020. Gold drooped again, as did silver, iron ore faded, but copper bounced on Friday. Gold finished the week under $US1,700 an ounce and at a 9-month low. While the stronger US dollar played a significant part in the weakness on Friday, it didn’t impact copper (or oil) which rose by nearly 2.5% on the day.

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Have you prepared for the unexpected?

One in eight homebuyers don’t discuss their protection needs

 
Buying a property is usually the biggest financial responsibility many of us will take on in our lifetime, and it’s an obvious moment to pause and think about our protection needs.
The most common types of mortgage protection typically consists of mortgage life insurance with critical illness cover and mortgage payment protection insurance (MPPI). Nobody wants to run into financial difficulty, but homeowners should have provision to continue paying their mortgage if something happens to their main source of income.

Older homebuyers the most exposed

Relying on savings isn’t viable for many and certainly isn’t good for financial resilience. However, one in eight (13%) homebuyers who purchased their mortgage via a mortgage broker did not discuss their protection needs, according to new research [1], with older homebuyers the most exposed, with the potential for the higher risk of health issues impacting their income.
The majority (76%) of homeowners discussed protection products during their initial session, with life insurance being the most commonly purchased product (57%), followed by critical illness (36%) and income protection (31%).

More likely to suffer from health concerns

However, more than one in ten (13%) did not discuss protection at all, rising to a fifth (20%) of those aged 55 and above– despite this age group being more likely to suffer from health concerns. More than one in four homebuyers who did discuss protection did not go on to make a purchase (28%), leaving them unprotected as a result.
Of these, 25% rejected the opportunity to take out cover because they felt they couldn’t afford the premiums, as the overall cost of buying a home was already expensive. A slightly smaller proportion (19%) felt they could not afford the cost as the mortgage itself was costly.

Didn’t see the value in protection products

Nearly a quarter (23%) didn’t see the value in protection products, while 18% thought they would never need them. One in seven (14%) intended to purchase protection through a different route but never got around to it.
Alarmingly, two in five homeowners (42%) could only cover essential bills for up to two months if their household lost its primary income, and a further 30% could only extend to six months. Adequate financial protection is therefore vital to ensure households can keep up their mortgage payments and retain possession of their home should they unexpectedly lose their income.

Are you prepared for life’s unexpected events?

When life becomes unpredictable, we can help you protect against financial hardship. When you need it most, having the right protection in place will provide you with that important financial breathing space. To review your current protection requirements or to find out more, please speak to Lawson’s Equity on +356 2157 6666 or email info@lawsonsequity.com for further information.
Source data:
[1] Canada Life 10 December 2019
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
The value of investments and income from them may go down. You may not get back the original amount invested
Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994. Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here
In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Market Update 26/2/21

Focus was on interest rates last week, as the increase in government bond yields sped up, unsettling both equity and fixed-income markets. Bond volatility has risen to the highest level since April last year and spread to other asset classes.

The major benchmarks pulled back sharply in response to the steep rise in longer-term Treasury interest rates. The S & P 500 index recorded its largest weekly decline in a month, while the Nasdaq Composite Index suffered its worst decline since October. Consumer discretionary shares were specifically weak, driven in part by a steep decline in the automaker Tesla, while a decline in Apple shares weighed on the information technology sector. Energy stocks outperformed as oil prices rose. 

Consumer inflation data published earlier in the month surprised on the downside, but producer prices, reported at mid-month, rose 1.3% in January, much more than consensus expectations and the largest increase in data going back to 2009. Inflation has also been pronounced in the housing sector, and Tuesday brought news that home prices had increased 10.1% in December from a year before. Relatedly, lumber futures have reached record highs, while copper prices are at their highest levels in a decade.

Inflation concerns, stronger-than-expected economic data, technical factors, and weak auction results combined to push the yield on the benchmark 10-year U.S. Treasury note to around 1.61% on Thursday afternoon, its highest level in over a year. The broad municipal bond market also was affected through most of the week as tax-exempt yields continued to follow Treasury yields upward.

Shares in Europe dropped along with global markets. Trading was volatile during the week as worries grew that central banks might need to act sooner than anticipated to subdue inflationary pressures that could come with an economic recovery. In local currency terms, the STOXX Europe 600 Index ended the week 2.38% lower. Major Continental stock indexes decreased, as did the UK’s FTSE 100 Index, which came under pressure from a stronger British pound. The currency rose to its highest level in almost three years, reaching USD 1.42 before pulling back from this peak, as the swift rollout of coronavirus vaccines fuelled recovery hopes and investors priced in an interest rate hike over the next two to three years.

Core and peripheral eurozone government bond yields rose, tracking moves in U.S. Treasury yields. Pacifistic rhetoric from Fed Chair Powell triggered a sharp bond sell-off throughout most developed markets as it struggled to ease fears of inflation rising. Christine Lagarde, president of the European Central Bank, and other policymakers warned markets they were keeping an eye on borrowing costs, but the consequent decline in yields was temporary. Gilt yields also rose in line with other developed markets.

British finance minister Rishi Sunak is predicted to extend the jobs support program until at least May in his budget next week, and there may be state support for sectors hit the hardest by the lockdowns, such as aviation. Denmark also said it would ease restrictions in the retail sector and allow some schools to reopen on March 1.

Fourth-quarter German gross domestic product (GDP) data were revised up unexpectedly to a growth rate of 0.3% from an initial estimation of 0.1% on strong exports and solid construction activity. The full-year figure was increased to -4.9% from -5.0%. The Eurozone Economic Sentiment Indicator rose to 93.4 in February from 91.5 the month before, the highest since March last year, the EC said. 

Japan’s stock markets tumbled on Friday, the last trading day of the month, ending sharply lower for the holiday-shortened trading week. Japan’s stock markets were closed on Tuesday, February 23, in observance of the Emperor’s Birthday. For the week, the Nikkei 225 Stock Average declined 3.5% (1,052 points) and closed at 28,966.01. Chinese shares fell in tandem with the global sell-off. The Shanghai Composite Index shed 5.1%, while the large-cap CSI 300 Index fell 7.7% in its worst weekly performance since October 12, 2018.

Important economic data being released next week include the PMI composite, jobs data, and consumer credit levels.

5 Healthy Financial Habits You Shouldn’t Ignore

How to get your finances in order to make more of your money

Do you feel like your financial life has been turned upside down during the coronavirus (COVID-19) pandemic? Or, has the start of the new year focused you on getting your finances in order to make more of your money? Whatever the answer is, it’s important to adopt healthy financial habits.

But just as bad habits can get you into financial trouble, good habits can help keep you out of it –and help you spend wisely, save well and, most importantly, reach your biggest financial goals faster.

To help kick-start this process, we’ve put together five habits for you to consider.

Pay yourself first

Before you pay any bills, develop a habit of paying yourself first. That means saving and investing a portion of your earnings before you do anything else with your money. In the book The Richest Man in Babylon, written by George S. Clason, the parables are told by a fictional Babylonian character called Arkad, a poor scribe who became the richest man in Babylon. How did he achieve this? By following the first law of wealth: ‘Save at least 10% of everything you earn first and do not confuse your necessary expenses with your desires.’

It’s great to start somewhere – saving something is better than nothing. The important thing is that you’re building a new habit around making some of your hard-earned money work for you, as opposed to someone else. After you’ve paid yourself, the rest of your earnings can then be used to pay bills and purchase the things you need.

Spending less than you earn

The problem is that if you routinely spend more than you earn, you could be building up more and more debt. In many cases, that may mean turning to a credit card and not paying off the balance each month, leaving you with potentially exorbitant fees and interest rates that can take years to pay off. When considering spending on something you want – always ask yourself if you genuinely need it.

Emotions should not affect your financial decisions

For many people, money habits are tied to emotions and how we feel. It’s easy to fall into the trap of spending money when we’re disappointed, or angry, or even happy. While emotions are important, they aren’t helpful when it comes to making financial decisions. Develop a habit of taking your time and making level-headed, rational decisions about money rather than allowing spending, saving and investing habits to be dictated by the way you’re feeling at a moment in time.

Control your debt

Debt is not necessarily always a negative, in some cases debt can be a positive stepping stone to help get you closer to a more prosperous future. For example, although a mortgage is a form of debt, purchasing a home could be a necessity for you. Similarly, borrowing money to enhance your education could allow you to get a better paid job. You might even be borrowing money to set up a business.

On the other hand, using credit cards, for example, to cover extra spending is generally considered a bad use of debt, as the repayment terms and interest payments can often be onerous as well as expensive if it’s not paid back on time.

It’s generally considered good practice to avoid carrying a credit card balance over from one month to the next, as over the longer term this can often become very expensive, very quickly.

Speak to your professional financial adviser

When it comes to managing your money, planning to build wealth, securing your future, and, above all else, drawing up an effective plan for fulfilling your objectives, talk to us.

We will provide a wealth of knowledge, qualifications and experience that is difficult or impossible to achieve yourself.

Perhaps the main benefit, more so than any other, is the chance for relaxation. You can properly relax, safe in the knowledge that we are taking care of a wide range of challenges and questions that you would otherwise have to deal with. And if you do have any questions or concerns, you know you can easily contact us to get answers in a timely manner.

How to build new habits into your daily life

  • Know your why – what’s your reason for making the changes?
  • Set realistic, measurable goals that are achievable
  • Break up bigger goals into smaller actions
  • Don’t make too many changes at once
  • Use rewards as a motivator (within reason) to treat yourself once you meet your goals

Soon enough, these good habits will become hard to break.

Need help developing better financial habits in 2021?

Making the right decisions now can bring peace of mind by offering a clearer future for you and your family. Together, we’ll create a wealth plan that goes beyond simply finances, taking care of what really matters in every aspect of your life. To discuss your situation click here to schedule a no obligation initial consultation with one of our financial advisors.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and Licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994.

Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

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