Robust equity markets remain a tempting option for UK investors
It seems difficult to remember a time when investment markets have been so driven by politics and government leaders instead of economic data and company results, nor a time when social media, especially US President Trump’s Twitter account, was so closely watched by investment analysts.
For many reasons, 2018 is proving to be a memorable year. In March, President Trump announced steep tariffs on steel and aluminium to take effect the following week – they were to be applied broadly at first, with no specific targets or quotas. In the same month, President Trump accepted an invitation to meet the North Korean leader, Kim Jong-un.
Two months later, President Trump announced his intention to withdraw the USA from the Iranian nuclear agreement and, at the end of May, it was announced that the USA’s 25 per cent steel and 10 per cent aluminium import tariffs were being extended to include the European Union, Mexico and Canada.
Two weeks after that, a North Korea/United States summit took place in Singapore and became the first face-to-face meeting of a United States president and a North Korean leader. Finally, the 2018 football world cup was played out in Russia and ran remarkably smoothly for President Putin in Moscow.
Despite all this, as well as the on-going Brexit saga, major equity markets have remained largely positive – the USA’s Dow Jones share index reached an all-time high in January 2018 and the Nasdaq, which predominantly represents the US technology sector, reached an all-time high in mid-July. Closer to home, in the UK the FTSE 100 index presently sits at around 7,600 points, only 3.6 per cent off the all-time high of 7,877.45 that it reached on 22 May 2018.
With UK base rates remaining at a historical low of 0.5 per cent, cash investments remain out of favour with investors.
Investors who depend on income from cash deposits can expect only moderate upward movement in interest rates, so for capital that can be invested for more than five years the investment markets remain a possible and tempting alternative, despite increased political uncertainty.
As always, professional advice is paramount when it comes to deciding on an appropriate investment strategy between low, medium, and high risk, while regular reviews that take account of changing events are vital if investors are to weather the political storm.Business, General, George Ide, Investment, News