‘Brexit’ – taking stock…

In the three weeks since the Referendum result the UK Stock Market, as measured by the FTSE 100, has risen by around 8% to stand at 6,689 (at time of writing).  This could be taken as a sign of confidence in the UK economy or in the UK’s ability to negotiate a favourable trade deal with the EU.  On the other hand, the FTSE 250 Index is around 3% down (at time of writing), which gives out ‘mixed signals’.  The different performance can be attributed to the fact that the large companies in the FTSE 100 generate more significant earnings from overseas which are now valued higher due to to the weakening of the pound.  Despite their being much political change which still has not settled, markets have remained relatively calm with the longer term impact of ‘Brexit’ being uncertain…. Those clients with more exposure to equities will have benefited from some short-term growth and we re-iterate our advice to those with diversified portfolios to take the long-term view.

‘Brexit’ Initial Reaction

Like the rest of the financial world, MJB were a little surprised by the ‘Brexit’ result, but not surprised by the initial reaction of the Stock Market and currency changes.  As we write this the Stock Market has recovered somewhat from the early falls of over 8% to be 4.7% down with the FTSE 100 just over the 6,000 level.  This is higher than it was in September last year and February this year.  Similarly, with the pound against the dollar an initial slip of around 11% has since adjusted to 6.6%.  Our advice to those with investment portfolios is ‘not to worry’ – most of you have diversified portfolios that should cushion you from the worst of the volatility and long term prospects may well be unaffected.

Please read the article below by Neil Woodford:

Brexit- initial thoughts _ Woodford Funds

Last Week in the Markets

11 - 15 June 2018
Index Close Week’s Change 52 - Wk High 52 - Wk Low
FTSE
100
 7,634 -1.34% 7,904 6,867
Dow
Jones
(US)

25,090

-0.97% 26,617 21,197
Nikkei
225

22,680

-0.03% 24,129 19,240
DAX  13,011 +1.52% 13,597 11,727

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