Market Update – Record Highs & Rising Yields

2018 is well underway and the first few weeks of the year have seen record high levels of the FTSE 100 index, as well as the Dow Jones.

The main concern is whether this optimism is based upon solid foundations, or it is a bubble about to burst.

Within the UK there are lots of reasons for the buoyant markets. The weak Pound, especially against the Dollar and Euro, has certainly helped, as evidenced by increasing yields from the FTSE 100 companies.

There are though other positive stories, such as the pick-up in manufacturing productivity. This is arguably most encouraging as it shows the UK economy is moving forward and not totally reliant on exchange rates and overseas earnings.

The US continues to defy expectations as their financial markets buoyed by the relaxed taxation rules.

Looking ahead we are fairly realistic in that the main indices such as the FTSE 100 in the UK and the Dow Jones in the US, will ultimately suffer a correction and fall back from their highs.

But for our clients who hold truly diversified investments this isn’t a concern as their exposure is fairly modest.

The majority of our clients investments include numerous asset classes and funds which cover almost all geographies and sizes of companies, not just the largest 100 as in the FTSE 100 index.

The year ahead is looking encouraging for investors. Brexit negotiations continue and the media hype is unlikely to distract stock markets too much in 2018.

Investors holding a varied and well distributed portfolio will hopefully see steady growth even allowing for any short-term blips in the FTSE 100 or main US indices.

As with previous market updates, we encourage our clients to keep in touch.

Contact us should you have any queries or worries. Our team are always happy to have a chat. Whether it is a review driven by concerns in financial markets, a change in legislation or simply an alteration in your situation or priorities, please contact us.

Further update…

In the past week, as we make our way through February, we have seen the corrections alluded to in the recent market update.

The positive news is that most pundits and investment managers consider this dip a short term blip and something which has been a long term coming as the US continues to strengthen as an economy.
This strengthening has an impact on potential interest rates and exchange rates, all of which have a knock on effect to stockmarket fluctuations.

Overall, longer term investment opportunities continue to present themselves and investors with balanced portfolios could benefit from the recent volatility.

 

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