Corporate rumours, Interest Rates and Trump cause a mixed outlook for the month.
Brexit still dominates the conversation: the Markets in January
Following on from a poor final quarter, markets tiptoed into the new-year, experiencing (for the most part) small positive gains. Although there were the usual number of broker outlooks for the year ahead it was noticeable that with the dark clouds of Brexit overhanging the UK market, there was far less in the way of individual share tips.
Areas which dominated crystal ball gazing for 2019 included; Trump, a likely increase in volatility, China/US trade, Interest rates, slowing global growth and of course the previously mentioned Brexit.
Over the month we have noted rumours regarding a number of companies that could be ripe for some form of corporate activity. These included; Brewin Dolphin, Thomas Cook, Morrisons, easyJet and Dixons Carphone, along with a comment that the utility sector could see M&A activity over 2019.
Following on from the festive period there were the usual trading updates from retailers. Expectations had probably been as low as any sector follower could remember, especially for those with a high street presence and a lot of the expected bad news was already reflected in the share price in many cases. So although the news could best be described as mixed and the outlook for many difficult, there was a recovery in the share price of many famous names including: Tesco, Marks & Spencer and Next.
As the month draws to a close we are once again at a crucial stage in the Brexit situation. With all the uncertainty surrounding the final outcome, the result so far has been a form of increasing paralysis for some financial markets. The pound has rallied against the Euro and Dollar though as fears of a no-deal recedes. The FTSE 250 also beat its big brother the FTSE 100 with a gain so far in January of around 6.5%. This index is made up of companies that are far more UK focussed and given the relatively attractive valuations of the UK market, could this be a sign (that if an orderly departure from the EU can be worked through) of better times ahead?
With the first snows of winter hitting and Brexit blues eating into the psyche, I feel we are in need of a feel good prediction for 2019. Despite being thrashed by the West Indies, a cricket win double of the World Cup in July and Ashes in September will give us all a boost.
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.