An early spring corrective

In February there was a changing of guard at the US Fed. In a break with the unwritten tradition, Janet Yellen was not appointed for a second, final term, but replaced by Jerome Powell, who it soon became clear is more of a hawk and a supporter of interest rate hikes. This is bad news for share investors. After his first few comments, in which he talked of the risk of an overheating economy, the expectation of interest rate hikes in 2018 and 2019 has grown. That former benefactor of the global exchanges – Donald Trump – also added fuel to the fire when he announced the introduction of tariffs on imports of aluminium and steel. China may now decide to reciprocate, triggering a trade war between the world’s largest economies. This, in turn, would reduce the value of the trade between countries (as the World Trade Organization has already warned), which is a concern for companies and investors around the world. The main economic indicators stopped improving in February,