Brexit and the UK consumer with Investec UK Alpha
Managing Director, Darius McDermott, discusses Brexit uncertainty and choppy outlook for 2019 with...
Last month, we asked FundCalibre investors a simple question: where do you think the UK stock market will end the year¹?
Brexit and now a general election have ensured that uncertainty reigns in the UK and our results show that feelings are very much mixed over how this might affect your investments.
Forty per cent of respondents felt the UK stock market would end the year higher, but they were closely followed by 33% who expected the market to end the year roughly flat. The remaining 27% said they thought it would finish lower. You could hardly call that mix conclusive!
In the year to date, the FTSE All Share is up 4.3%, but that is down on the high of 5.3% it reached back on 20 March. Since then, Theresa May has triggered Article 50 and announced a snap election. The election in particular had the effect of boosting sterling, as people perhaps perceived that it could put Britain in a stronger negotiating position when it comes to exiting the European Union.
Although this would be good news in the long term for the British economy, it reversed some of the shorter-term gains the FTSE has experienced since the Brexit vote nearly a year ago. That is because these gains were mostly related to the fall in the pound, which has meant that the UK’s largest companies, which earn much of their revenue overseas, have received a boost to their profits when converted back into sterling.
Unfortunately, without a crystal ball, it seems the fate of UK equities this year is anyone’s guess!
¹Based on the responses of 78 FundCalibre site visitors between 1 April 2017 and 30 April 2017