Schroders 

Schroders expects bull market to end in 2020

Schroders expects bull market to end in 2020

Schroders is predicting the current bull market will become the longest in history but will come to an end in 2020.

Speaking at the Chartered Institute for Securities & Investments Paraplanner Conference, Philip Robotham, of Schroders's financial institutions and strategic accounts team, said attempts to control inflation in the US would probably bring the bull market to an end.

Highlighting historic data, Mr Robotham said the current bull market would only need to last for one more year to become the longest in history.

He said: "For equities to continue doing as well as they have been doing, they are going to have to work much harder to surprise us on the upside.

"Given where growth is and the Trump tax reforms and fiscal stimulus, particularly in the US, do we think the bull market will continue for another year? Yes, absolutely.

"Schroders is predicting this market will continue until around June next year. There is this banana skin around the corner and all good things must come to an end."

Mr Robotham said the end of the bull market was likely to be caused by a combination of the trade war between the US and China, which is getting underway, but he also predicted the Federal Reserve's attempts to control inflation would also have an impact.

He said there was the risk of stagflation because of the Fed's attempts to normalise monetary policy.

Mr Robotham added: "It will be made a lot worse by the fiscal policies introduced by Donald Trump. He is doing tax reform into an economy which is expanding."

He said the slowdown this could create could put "serious pressure" on portfolios.

But Lee Wild, head of equity strategy at Interactive Investor, said despite a short-term blip, Wall Street loves President Trump's pro-business agenda and aggressive foreign policy, and there is a clear reluctance to bet against an economy growing at a fair lick and boasting a record-low jobless rate.

He said: "This could backfire on Trump, however, if his unconventional approach triggers a sharper than expected increase in inflation.

"The threat of damaging trade wars with China and others is very real, and the perceived threat to financial markets is still able to make buyers think twice.

"Stuck in a reasonably tight 180-point range for the past three weeks, the FTSE 100 has failed four times to make a break above 7,770 stick.

"Fear around US rate hike aggression has caused a retest of technical support over 100 points lower. Not even the prospect of the opening game of this year’s World Cup in Russia later today is able to put life back into this exhausted bull market."

damian.fantato@ft.com