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Cathedral Financial Management

At Cathedral Financial Management, year on year since 1993, we have continued to achieve excellence that is well above the standard for our industry, helping our clients build wealth and financial security. Whether we are advising privately, or to businesses, you can be confident in our professionalism and care.
Because life doesn't stand still, and because your circumstances mature and evolve, we like to nurture long term relationships where we can proactively manage your assets and deliver a tangible return for you.
When you entrust us with your financial affairs you can feel safe in the knowledge that you have at your disposal an experienced team of specialists; a team that includes some of the first in the country to achieve Chartered Financial Planner status*.
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Market Commentary June 2009

May saw more signs of “things getting worse more slowly” in some Western economies. An improvement in leading indicators and in investor confidence helped global stock markets rise over the month, spearheaded by emerging markets where positive political and economic news boosted Brazil, India and China and oil price increases buttressed Russian investments. Worries over the extent of Treasury issuance led to weakness in the US Dollar, whereas Sterling strengthened despite S&P warnings about UK government finances. It was a positive month for credit markets, with spreads narrowing and new corporate bond issues being well received.

In the UK markets continued to improve, with the FTSE All Share, FTSE 100 and FTSE Small Cap indices up by 3.7%, 4.1% and 3.1% respectively. This was mostly on the back of news early in the month of better retail sales, consumer sentiment and manufacturing activity measures. The FTSE 250 index could only manage a 0.6% rise, however. Despite the positive indicators, concerns over the levels of government borrowing led the ratings agency Standard & Poors to downgrade the medium-term outlook for the UK from stable to negative, while Mervyn King’s customary pessimistic assessment of the economic outlook affected markets towards the middle of the month.

In America the S&P 500 index was up by 5.3% over the month, its third successive monthly gain. The Dow Jones, NASDAQ and Russell 2000 indices were also up, by 4.1%, 3.3% and 2.9% respectively. Significant improvements in corporate profits, led by the financial sector benefiting from unusually low interest rates for borrowing, were accompanied by an increase in market appetite for risk. Consumer confidence was also up as a degree of optimism led to rises in retail sales and durable goods orders. A small increase in new and existing home sales was offset by record numbers of mortgage defaults and foreclosures, as US unemployment rose to a 25-year high and falling house prices left 22% of American borrowers in negative equity. The Eurozone economy continued to shrink in May, mostly due to a fall in both exports and investments, but at a slower rate for the third successive month. It was also the third month of gains for European shares thanks to heightened investor confidence, despite an increase in unemployment. The composite Purchasing Managers Index increased for the third consecutive month to end at its highest level since September 2008, while the headline rate of inflation fell from 0.6% to 0% and looks set to fall further. The European Central Bank cut interest rates by 25 basis points to 1%, but followed that with relatively timid stimulation measures when compared to those of other central banks.

Japanese investors ignored weak GDP data and equities ended the month generally higher. The government and the Bank of Japan both took heart from a reduction in inventories, a rise in industrial production and a stabilisation of exports to forecast a mild recovery. Unemployment continued to rise, however, with more applicants chasing fewer job opportunities.

Despite an increase in regional tension, caused by North Korea’s nuclear antics, Asian markets built on their recent recovery to end higher in May as investors concentrated more on signs of recovery than on depressing hindsight data. Indian equities rose 17% on the day the decisive electoral victory by the ruling Congress party encouraged hopes of economic reforms, while Chinese government officials were cautiously optimistic of a continuing early-stage recovery.

Latin America, and in particular Brazilian equities, led another strong performance in emerging markets, followed by EMEA countries. The MSCI Emerging Markets (US$) index was up by 16.7%, a rise of 36.3% over the year to date. Russian equities also benefited from increased commodity prices to finish May up by 30%, the best in emerging Europe. Hungary also performed strongly, but Poland and the Czech Republic did less well despite the latter cutting interest rates to 1.5%.