Brexit drives FTSE lower: the markets in November

Despite the uncertainty, November proves to be less volatile than October.

Article updated: 27 November 2018 2:00pm Author: Graham Spooner

November so far has been less volatile than October, despite an air of uncertainty hanging over the market. The FTSE 100 index drifted lower dominated by the Brexit situation and there is every chance that before the month is out the situation could change further. There are also the ongoing economic problems in Italy and concern about its budget plans, which many believe will increasingly focus the minds of the suits in Brussels.

Companies where takeover rumours have circulated include; Metro Bank, BT, Acacia and Flybe. There were also hopes that the under pressure telecom sector could receive a boost from EU regulators regarding a merger between two companies in the Netherlands, which in turn could open the way for further consolidation in the sector.

A fund managers’ survey by Bank of America showed that Britain is the least liked region, while the US remains the most favoured. For next year, 54% of fund managers who responded are bearish on China.

Perhaps of most interest has been the sharp falloff in the oil price, which started in October and has continued throughout November, with Brent Crude hitting a 12-month low of $58.80. Supply of oil has increased on reports of record Saudi Arabia production and an easing of Iran sanctions.  Supermarkets have led the way with cutting the price of petrol, which in turn may loosen the purse strings of its customers in the lead up to the hugely important Christmas period.

The leading technology shares, or FAANGs, as the famous five are often referred to experienced further profit taking, as investors looked to perceived over-valued areas of the market.

As we approach the month of December and the New Year, investors are probably less optimistic for a Santa rally which has, incidentally happened over the last 2 years. Year to date the main FTSE 100 index is down by around 8% and the more UK focussed FTSE 250 by 10.5%, so any help from our Nordic friend would be much appreciated.

With England winning at rugby and cricket at least predicting the outcomes of next year’s World Cups may be easier than the task that we and many others in the industry will be attempting in the final weeks of 2018.

With our next comment coming after the initial celebrations may I be the first in passing on seasonal greetings.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.