January 2019

The Janus Henderson Global Snapshot explores the themes driving markets, the trends to watch, market returns and metrics, and the Multi-Asset Team’s outlook for regions and sectors at quarter end.


Inflationary pressures easing as global slowdown spreads to US

Image_The USA flag
Image_The Chinese flag
Image_The Japanese flag
Image_The European Union flag
Image_The Union Jack Flag
Image_A selection of Emerging Markets flags

Market drivers:


Core stability
Core inflation remained static, defying predictions of a pick-up in response to faster wage growth. The annual increase in the consumption price index excluding food and energy was 1.9% in November, below the Federal Reserve’s 2.0% fourth-quarter forecast.


Profits weakness
Industrial profits fell by 1.8% in the year to November, the first annual contraction since 2015, reflecting limp economic growth and slowing producer prices. Economic weakness intensified at year-end, with manufacturing purchasing managers’ indices falling below 50.


Muted recovery
Industrial output bounced back after third-quarter disruption due to bad weather, but underlying momentum appears weak with the manufacturing purchasing managers’ index well down on a year ago. Consumer confidence has also eroded.


Weak economy
Purchasing managers’ surveys signalled a further loss of economic momentum in the fourth quarter, following shock German and Italian GDP contractions in the third quarter. The survey-based composite output index fell to a 49-month low in December.


Unemployment rise
Brexit worries contributed to a further fall in business investment and a slowdown in hiring. Unemployment rose by 20,000 in the three months to October, while the number of people claiming unemployment-related benefits is the highest since 2014.

Emerging markets

Policy tightening
The trend towards higher interest rates continued, with inflation and currency concerns outweighing softer economic data. Central banks in Chile, Czech Republic, Indonesia, Korea, Mexico, Philippines, South Africa and Thailand hiked official rates last quarter.

Trends to watch:


Profits slowdown
Corporate profits continued to expand solidly in the third quarter but equity analysts cut earnings forecasts in late 2018, reflecting concerns about top-line sales and wage costs. A profits slowdown would feed back into business investment and wider economic weakness.


Policy easing
Policymakers are cutting taxes, boosting infrastructure spending and trying to encourage bank lending to private companies. Further easing measures are likely in early 2019. Watch money trends – currently still weak – for evidence that policy stimulus is gaining traction.


Inflation slowdown
The Bank of Japan’s core inflation measure eased to 0.3% in November, far below its 2% “price stability target”. Yen strength suggests a further decline but will the central bank admit defeat and downgrade the target in 2019?


Unemployment reversal?
The unemployment rate fell from 8.7% to 7.9% over the year to November 2018 but recent weak GDP growth may feed through to a turnaround in early 2019 – contrary to the European Central Bank’s forecast of a continued decline.


Economic weakness
Money growth and local share prices both fell during 2018 – historically a signal of poor GDP performance in the following year. Brexit uncertainty will remain a drag on economic prospects even if a no-deal crash-out is avoided.

Emerging markets

Currency stabilisation
EM currencies could rally if a US slowdown causes the Federal Reserve to shelve tightening plans. A recovery would ease inflationary pressures and create scope for policy easing, supporting local currency bond markets, with equities suppressed by weaker export earnings.

Source: Janus Henderson Investors at 31 December 2018. These comments are the views of Simon Ward, Economic Adviser, and should not be construed as investment advice. These views may differ from those of other Janus Henderson fund managers.


Equity market returns for Q4 2018 (%)Local currencySterlingDollarYTD sterlingQtr dollarYTD dollar
US S&P 500-14.0-6.2-11.9-0.4-14.0-6.2
Japan: Topix-17.8-17.8-12.9-10.4-14.9-15.6
Euro area: Euro Stoxx-13.2-14.8-12.5-13.8-14.5-18.9
UK: FTSE All Share-11.0-13.0-11.0-13.0-13.1-18.0
MSCI Far East ex Japan (US$)---8.0-12.1-10.2-17.2
MSCI Emerging Markets (US$)---5.6-11.5-7.9-16.6

Source: Thomson Reuters Datastream, Janus Henderson Investors, index price returns, as at 31 December 2018.
Note: the TOPIX Index Value and the TOPIX Marks are subject to the proprietary rights owned by the Tokyo Stock Exchange, Inc. and the Tokyo Stock Exchange, Inc. owns all rights and know-how relating to the TOPIX such as calculation, publication and use of the TOPIX Index Value and relating to the TOPIX Marks. No Product is in any way sponsored, endorsed or promoted by the Tokyo Stock Exchange.

 Forecast P/E 2018Forecast P/E 2019Forecast EPS growth 2018 (%)Forecast EPS growth 2019 (%)
Emerging markets11.310.411.99.0

Source: Thomson Reuters Datastream, Janus Henderson Investors' calculations, and IBES (institutional Brokers' Estimates System) estimates for MSCI Indices as at 31 December 2018. Forecast EPS (earnings per share), Forecast P/E (price-to-earnings ratio).

Consensus GDP growth forecasts (%)201820192020
Euro area1.91.61.5
Asia ex Japan6.05.75.6

Source: Bloomberg, economic forecasts, as at 7 January 2018. Forecast GDP = real gross domestic product.

Euro area: EU member states using euro currency (currently 19)
Asia: China, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam
BRICs: Brazil, Russia, India, China
World: G10, Eastern Europe & Africa, Asia, Latin America, Middle East

Consensus inflation forecasts (CPI %)201820192020
Euro area1.71.71.6
Asia ex Japan2.42.52.6

Source: Bloomberg, economic forecasts, as at 7 January 2018. Forecast CPI = consumer price index.

Bonds31 December 2018 yieldQtr return %YTD return %
US 10-year Treasury2.693.81-2.90
Japan 10-year government bonds0.001.320.72
Germany 10-year bund0.252.242.87
UK 10-year gilts1.272.770.61
Corporate bonds: (Barclays Global Aggregate Corporate Index $)--1.05-5.35
High yield: (Merrill Lynch Global High Yield $)--3.79-3.33
Emerging market debt (JPM Global Emerging Markets Debt $)--1.19-4.61

Source: Thomson Reuters Datastream, Janus Henderson Investors, as at 31 December 2018.

Currencies and commodities31 December 2018Qtr change %YTD change (%)
S&P GSCI Total Return Index $--22.94-13.82
Brent oil ($/barrel)--35.83-20.24
Gold bullion ($/Troy oz)-7.54-1.70

Source: Thomson Reuters Datastream, Janus Henderson Investors, as at 31 December 2018.

The above data is intended for illustration purposes only and is not indicative of the historical or future performance or the chances of success of any particular strategy. References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.


Please note the below are the views of the UK-based Janus Henderson Multi-Asset Team at quarter end. They do not represent a Janus Henderson house view or the views of individual fund managers and should not be construed as investment advice.

Positive Up icon    Neutral Neutral icon    Negative Down icon


Image of a Bond certificate
Global corporateRecent risk-off sentiment has led to broad-based underperformance. The asset class is at further risk from slowing earnings growth.
UK giltsMixed economic data prints and Brexit uncertainty have kept yields at low levels, but this asset class offers good diversification amid equity volatility.
Global sovereignUpwards pressure remains on yields due to the unwinding of quantitative easing and monetary tightening, but risk-off sentiment has kept yields at low levels.
Emerging market debtCountry-specific risks remain a headwind but tempering dollar strength and attractive spreads present a potential entry point in local currency debt.
High yieldSpreads have been widening and the asset class is further at risk from fiscal tightening and slowing global growth.


Image of a bull and a bear
UKThe UK market appears attractively valued, as do dividend yields. However, Brexit-related uncertainty continues to weigh on investor sentiment.
EuropePolitical uncertainty will continue to cloud the market outlook but we remain constructive owing to attractive valuations.
USDespite a correction in valuations during the recent sell-off, monetary stimulus is fading and corporate profitability is at risk of downgrades.
JapanJapanese market valuations are at very attractive levels but risks in the form of trade war tensions and a strengthening yen still remain.
AsiaWhile trade tensions have been a headwind to the region, share price valuations and corporate earnings remain constructive.
Global emerging marketsIdiosyncratic risks and a strong dollar have provoked outflows, but sentiment seems bearish in light of attractive share price valuations and tempering dollar strength.


Image indicating various currencies
£/$Brexit-related volatility plagues the UK, while a rising debt burden and trade war concerns dampen dollar bullishness.
£/€Political developments seem likely to continue to drive headlines and market moves on both sides of the Channel.
£/¥Risk sentiment is likely to affect the yen, while Brexit drives news flow and Japanese monetary expansion continues in the background.


Image of stacked gold bars
PropertyProperty appears expensive and typically struggles in a rising interest rate environment. However, yields remain higher than many asset classes.
GoldGold is a useful hedge to hold as markets become more volatile. Returns have improved as demand has increased in the recent risk-off environment.
OilPoor supply and demand dynamics have hit oil prices, but this has scope to rebound as markets price in a slightly better macroeconomic outlook for 2019.


Recent articles from Janus Henderson's investment teams

Strategic Fixed Income: visible signs of a late-cycle world

par Jenna Barnard, John Pattullo

il y a 3 mois
A concoction of elements all point to the fact that the global economy is now definitively in the late-cycle stage, while narrative fallacies flourish in the markets. 
Chine : les ruptures à venir dans le secteur technologique

par Richard Clode

il y a 5 mois
Les entreprises chinoises continuent à bouleverser le marché de la technologie. Dans cette vidéo, Richard Clode, gérant de portefeuille au sein de l’équipe Global Technology de Janus Henderson, évoque son récent séjour en Chine, où il a rencontré la prochaine vague d’entreprises qui devraient révolutionner le marché.
Le manifeste de la croissance

par Jamie Ross, CFA

il y a 5 mois

La surinformation nuit-elle à la prise de bonnes décisions en matière d'investissement ? Dans cet article, James Ross, co-gérant du fonds Janus Henderson Horizon Pan European Equity, examine l'intérêt d'une stratégie de croissance de qualité bien définie, cherchant à investir dans des sociétés prospères présentant de bonnes perspectives à long terme.​


This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. 
If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially. 
Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Issued by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. 
© 2018, Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC.

Un message important