Fund managers urge caution despite market rally

"Markets have now risen in almost a straight line for two months; the snapback has been almost as vicious as the sell-off. That won’t continue. Yes, the US economy continues to create jobs at an impressive rate. But other data readings have been ‘OK’ at best rather than great.

"The trade negotiations between China and the US have yet to be resolved. China has lowered its growth target for the year. And the wrangling over Brexit seems interminable. So even if the economy can muddle through these various challenges that await, we suspect that things could become bumpy from this point."

Edward Park, deputy chief investment officer at Brooks Macdonald, said the recent strong performance of markets had prompted him to buy more government bonds.

He said those assets are generally diversified from equities, so at a time when share prices are rising, owning government bonds offers protection.