Market Update

News this past week:

  • Equities & Euro up following first round of French election
  • May calls snap UK election
  • Flash PMI’s encouraging in Europe, less so in US
  • UK retail sales decline in March
  • Poor week for oil as US inventories rise

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Global Market Viewpoint Q1 2017

As UK Prime Minister Theresa May calls for an early general election to expedite the Brexit process, Glyn Owen, Investment Director of Momentum Global Investment Management, one of our UK regulated, discretionary investment managers shares his view of the markets and reviews first quarter of 2017.

One week until Article 50

BrexitIts just a week until Britain is expected to trigger Article 50, sterling is at a three week high, UK inflation is at its highest since 2013, leaked EU documents suggest Britain could be kicked out EU and fined £50bn.  Add to this that the Bank of England (BoE) Chief Economist Andy Haldane is postulating a base rate rise to 4.25% that could wipe out 1.5 million jobs but boost productivity in the long run.  Scotland is pushing harder for another independence vote, and the BoE predicting a further retail slowdown: all in all perhaps enough commotion to burrow yesterday’s embarrassing infighting of the Labour Party. Or perhaps not.  It seems that it doesn’t matter how old a nation’s democracy, advanced its economy or established its laws; political risk teeters when the populous lambast inequality and the public coffers are constrained by their own indebtedness.

Following Labour’s commotion yesterday, with Labour deputy leader Tom Watson clashing with shadow chancellor John McDonnell and an embarrassing parliament session feud, Jeremy Corbyn’s video address seemed a phony attempt to reassure members that the embarrassment only goes to prove that ‘spirits in the Labour party can run high’. Mercifully, attention is focused less on Labours potential disconnect and more on the impending Brexit annulment.

Prime Minister Theresa May’s ‘no deal for Britain is better than a bad deal’ is being threatened by the EU’s leaked plans for a prolonged legal battle, seeking £50bn of apparent dues, should the UK leave the EU with no deal. President of the European Council Donald Tusk promised to make ‘the process of divorce the least painful for the EU’ implying the obvious antithesis for the UK. But as difficult as the Brexit process could be, the legitimacy of the EU’s request for alimony seems tenuous and the potential damage to the EU from a go-it-alone Britain should prove a strong incentive for some sort of eventual deal.

UK Prime Minister Theresa May delivered her keynote speech on Brexit

Theresa May.pngShe said that the UK government will put the Brexit deal it agrees with the European Union to a parliamentary vote. She also vowed to make a ‘truly Global Britain’. “I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be a secure, prosperous, tolerant country, a magnet for international talent,” May said.

The FTSE 100 traded negative after the speech. However, the sterling was up by more than 2.8 percent against the U.S dollar, putting it on track for its biggest daily increase since 1998.

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Source: CNBC, 17 Jan

Weekly Market Update

  • UK market hits twelve consecutive days of record highs
  • Sterling dips ahead of PM May’s Brexit speech
  • Dollar retreats following Trump press conference
  • Chinese trade data shows fall in exports
  • US small business confidence soars

James Klempster (CFA) of Momentum Global Investment Management shares his view:

As Barack Obama’s presidency began in January 2009 – deep in the market sell-off following the global financial crisis – it was reasonable to presume that his job was at best thankless and at worst almost impossible.  Yet, in many ways history may well tell us that his job was simple in comparison to that of his successor.  Obama rode to victory on a tide of optimism and expectation that set him apart starkly from George W. Bush.  Obama’s youth and eloquence stood him apart from the man he replaced.  During that time tensions and the risk of policy missteps were high, but equally expectations were low due to the volume of bad news.

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UK’s FTSE 100 Defies Brexit Blues to Charge into Bull Market

FTSE 100 Bull MarketThe FTSE 100 charged into bull market territory Monday and the pound spiked above $1.30 after Theresa May won the race to succeed David Cameron as Prime Minister.

A third day of gains helped push the UK’s FTSE 100 Index into bull-market territory.

After recovering from its post-Brexit plunge in just four days, the gauge of UK megacaps continued its rally, and is now up 21% from its February low. A dramatic plunge in the pound has made the gauge’s multinational companies more attractive since the country’s vote to leave the European Union. Analysts have joined investors and strategists in taking note, boosting profit-growth estimates for FTSE 100 members by about 4.5% in just over a week, the biggest such upgrade in more than a decade.

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