It has been almost a week since we heard the news about Britain’s vote to leave the European Union (EU). In that time investors have had a chance to reflect, and the dust has begun to settle. The initial reaction was subdued panic, as we saw markets drop around the world. More recently, it seems cooler heads are prevailing as investors are buying on opportunity, and market increases over the last two days reflect this sentiment. The question is what can we expect next?
Once again, our investment partner on the ground in the UK, Irish Life Investment Managers, provides their perspective:
MARKET PERFORMANCE
Following further falls in equity markets on Monday, equity markets have rallied over the last two trading days so that at the close on Wednesday global equities are now above their closing levels of last Friday although are still down 2.3% in local currency terms and -1.0% in Euro terms from the levels prior to the referendum result becoming apparent. UK equities have in fact recovered to levels above those at the close last Thursday.
Sovereign bond markets have continued to move ahead with German 10 yields falling to -0.13% while peripheral spreads against Germany have narrowed to approximately 140bps, only 10 points wider than last Thursday.
Having fallen further earlier this week, the British Pound has recovered in recent days and is only marginally lower against the Euro versus Friday’s close at 0.821 currently. Similarly, having drifted slightly lower against the U.S. dollar earlier this week, the Euro has recovered to 1.110, close to last Friday’s close.
Click here for the full article.
22 July, 2016 Financial Planning Investment Services