Please find below our Weekly Market Update for the week ending 30th Aug 2019.
Blue Sky Comment
Wherever you look this week, markets have mostly performed well, with equities and Bonds snapping back into action. Only Emerging markets and the Far East have lagged, with Hong Kong particularly suffering due to the ongoing protests.
Earlier this week, the FTSE 100 looked like it was going to test 7,000 points but at the time of writing it has risen to just over 7,200 points. This is not a Brexit driven response but more a reaction to what is happening globally.
There is no doubt the month has been marked by volatility caused mainly by the ongoing trade wars between the US and China. Beijing has indicated it won’t retaliate (not immediately anyway) and this has delivered some respite to markets. US Treasuries weakened on the news.
At home, we have seen the pound plummet to 1.06 v the Euro reinforcing claims that we can expect to see parity between Sterling and the Euro. Earlier this week though, it bounced back to 1.11 before slipping back to 1.10 today. In broad terms, if the pound weakens, this is good for the FTSE 100 but if the news globally is not upbeat, the currency fluctuation will have little effect on the index.
Smaller companies have lagged the FTSE 100 with significant concerns over the economy around Brexit. The latest UK Consumer confidence figures have fallen to a six year low with business confidence being the lowest since 2011. This comes at a time when Citigroup have said that inflation expectations had jumped to a 6 year high in July!
Politically, the headlines have been dominated by the proposed suspension of Parliament. What are we to believe about why this is happening? Regardless of anyone’s views, it just adds to the mix of uncertainty which manifests in yet lower confidence.
One day this will all be sorted out!!!