Please find below our Weekly Market Update for the week ending 13th December 2019.
Blue Sky Comment
Light at the end of the tunnel?
We wake up this morning to a significant Conservative victory. It would appear that the vast majority wanted to move on from the impasse of Brexit and the uncertainty that has prevailed.
This communication isn’t about whether the result of the general election is right or wrong. It’s about what we should expect moving forward, in the context of managing your money.
This morning at 8.30am we have seen:
• The pound rise from 1.18 against the Euro yesterday, to 1.20 continuing its upward trajectory. A far cry from near parity, back in August. The pound has also risen against the Dollar to 1.34.
• Domestic companies’ shares have risen strongly with the FTSE 350 and the FTSE small cap index rising by just over 1.8%.
• The FTSE 100 has risen by 1.33%, despite a stronger pound.
Figures released earlier this week from the Office of National Statistics, showed that
the UK economy had its worst 3 monthly period since the financial crisis. The 4th quarter of 2019 is expected to be no better.
What we have needed is a strong dose of confidence for consumers, businesses and international investors. The market view is that this Conservative majority has a greater chance of delivering stability and optimism for the economy. It remains to be seen quite when Brexit will be concluded.
Investment wise, it is important to consider that most of our portfolios have between 25-30% in UK assets, spread across large, medium and small cap equities, whilst also having exposure to Government and Corporate Bonds. Diversification in our minds, has been vitally important running up to the election, however we now expect domestic stocks to be the main beneficiaries, alongside a stronger pound.
We mustn’t lose sight though, that the vast majority of our portfolios are globally placed and arguably, what occurs internationally, has a greater impact on performance, than what goes on in these shores. A stronger pound will now undoubtedly have implications for the way we manage our portfolios moving forward.
Let’s hope that most of the political promises have substance and we see a real commitment and inward investment into the fabric of the UK. It is well needed after years of austerity!