This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
The UK 100 index is now just 200 points from making fresh record highs. It’s been an incredibly strong finish to the week with the UK blue chip index shrugging off a heavy 36 point dividend impact on Thursday to break back above 6900 – a bullish sign that markets are reacting well to the Bank of England’s stimulus announcement and are expecting more to come. US equity indices have already made their own record highs this week, so could next week see the UK 100 follow suit?
Markets have largely ignored China’s Industrial Production and Retail Sales prints that missed consensus in the early hours of Friday. On the face of things it may look as if the readings endowed investors with hopes the People’s Bank of China (PBoC) will inject stimulus into the world’s #2 economy, but while the “bad data = good data” theme usually helps Asia-exposed stocks, in this case it hasn’t really (although one should note that the likes of Standard Chartered, HSBC and fashion label Burberry have all had a good enough day so far).
No, right now it really is all eyes on the UK market and what investors are expecting in due course from the Bank of England. This morning we heard that UBS, JP Morgan and S&P have all forecast UK interest rates to go to zero by February 2017 at the latest. Whatever you think about economic stimulus – whether it’s good or bad for economies – you need to know that stock indices love it. That’s because investors are rounded up like sheep and herded into equities by the Border Collie that goes by the name of ‘Returns’!
With monetary policy the world over ridiculously easy at present, the US Fed will have a tough time raising US interest rates and we think it’ll hold off for the remainder of the year at least (we’re not saying it will, just that we think it will…!). Whatever you view on monetary policy, whether or not it benefits the average Joe, there’s one asset class out there that absolutely loves it: Equities.
When will the UK 100 break last May’s record high of 7127? It could happen very soon. Trial our research here and join us for the ride over the coming two weeks.
Augustin Eden, Research Analyst
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
Comments are closed.