You are here: Home - Investing - Experienced Investor - News -

JPMorgan: three key considerations for stock market investors in the run up to Christmas

0
Written by: Mike Bell
14/11/2017
At this time of year it’s normal to spend more time worrying about what you’re going to get everyone for Christmas than the outlook for stock markets.

Amid all the festive distractions, it helps to narrow down your focus, so with that in mind here are three key things for stock market investors to watch between now and the end of the year:

First, keep a close eye on the Brexit negotiations. It goes without saying that the clock is ticking and if we don’t see tangible progress towards a transitional deal by the end of the year markets may start to price an increased probability of a “no deal” Brexit. If so, the pound could fall further causing companies which get most of their revenues from abroad to outperform those which are more domestically focused.

Likewise, if the market gets any reason to price a greater probability of a change in Prime Minister perhaps, that could also have a significant impact on the currency. Against a politically uncertain backdrop it probably makes sense not to have a very large exposure to the most domestically focused UK companies, which are generally found in the mid and small cap part of the market.

Unfortunately, most UK equity funds currently have a very big bet on these mid and small cap companies relative to the FTSE all share.

Second, watch the housing market data, particularly in London. The Royal Institute of Chartered Surveyors (RICS) survey tells us that London estate agents haven’t been this gloomy about the outlook since the financial crisis.

Were house prices to start falling that would be a concern for the economy and for UK focused equities. Caution on those house builders which are most exposed to the high-end of the London property market may therefore be advisable.

Finally, watch consumer confidence and the labour market. Typically, when the unemployment rate is falling and consumer confidence is rising, equity markets tend to perform well.

In the US and Europe, consumer confidence is at its highest in over 15 years and unemployment is falling fast. Unless consumer confidence falls sharply in these economies or there is a rise in joblessness, US and European equities should remain well supported.

In the UK, despite low unemployment, consumer confidence has been falling, which provides another reason as to why investors should consider broadening their equity exposure beyond the UK market.

Mike Bell is global market strategist at JPMorgan Asset Management

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Homeowners should be taxed on property equity

Stamp duty should be scrapped and replaced with a tax on equity in people’s homes, MPs have been told.

Close