Property
The UK housing market could be showing signs of cooling. Although prices are up by 11% on last year, UK house prices barely rose in August, and prices in London were flat. Properties are taking longer to sell on the market and the % of the asking price achieved has fallen from 99.2% to 96.4% in just 3 months. Time will tell whether this is a sign of a turning point or a pause, but house prices are overpriced and history shows that when the house price trend changes, house prices start to fall rather than plateau.
Energy
Oil prices have fallen from $115 a barrel in June to around $100. Despite the political troubles around the world, at present they are not interfering with production levels, as the global market continues to look well supplied. At present prices look more likely to move sideways, or drop further than to start a sustained rally. US natural gas however is in a very different place, as its entering a bull market which is being helped along by increasingly stringent regulations to switch to the cleanest burning fossil fuel.
Precious Metals
As the global economy continues to recover, gold’s appeal has been damaged, and if the UK and US raise interest rates which is expected, this will be bad news for precious metals that pay no interest and thrives on economic upheaval. But with many markets looking overextended, and Europe faltering, another financial crisis shouldn’t be ruled out, so gold could be useful asset to have some exposure to.
Bonds
Bonds have defied expectations this year by rising further, resulting in yields being sent lower. Quantitative easing has artificially inflated bond prices as the newly created money has been injected into economies through bond purchases. Bonds are currently looking overvalued and are vulnerable to an increase in interest rates, but are worth considering holding as a hedge against deflation.
Commodities
Gains achieved in the first half of the year in raw materials have since been dissipated, demand has been slow in China and Europe offsetting strong US figures, whilst supply has generally been very healthy.
Agricultural commodities look positive for the long term, although they look well supplied at present, but that won’t be the case forever as rising populations reduce the world’s supply of arable land.
Equities
Investors have been rattled that the eurozone’s recovery is faltering. But further deterioration in the economy should prompt the European Central Bank to deploy quantitative easing which tends to be positive for stocks.