“The UK missed out on the party but is sharing the hangover,” says Fidelity’s Tom Stevenson in The Daily Telegraph. Between June 2016 and the start of last month, America’s S&P 500 index jumped by 38%, compared with the FTSE 100’s 18%. But in the last few weeks they have fallen together. The jitters have been global, but uncertainty over our future relationship with the EU continues to dog the market. Yet therein lies opportunity.
It’s only a matter of time until lifting uncertainty over Brexit “will enable businesses to unleash long-term plans and investments”, says Ken Fisher in the Financial Times. Even if the new rules are not as favourable as UK companies had hoped – a no-deal Brexit, perhaps – they will still, at last, be “defined facts”. Once clarity sets in, chief executives and financial officers can get on with dealing with them.
Investors should strike before the uncertainty lifts, says Stevenson. The solid economy has bolstered domestically orientated mid-caps of late; “the real opportunity” is among blue chips. The FTSE 100 is on a “significant discount to other markets”. Around 15 FTSE 100 constituents yielded more than 6% last week. The average large-cap is on around 11 times earnings. Profits, moreover, are at record levels, says The Share Centre. Listed firms earned £217.9bn in profits in the last
12 months, eclipsing the 2012 record. Bulls take heart.