A SUMMARY FROM THE AWM INVESTMENT MANAGEMENT TEAM
19TH OCTOBER 2016
Elections play a big role when it comes to the effects of the market, these effects can be short term with spikes of volatility and long term relating to vast changes in decision making. Now only 19 days away, the U.S elections is a major event as presidential policies affect the economy which, in turn, can affect stock markets.
Please see this Article as it outlines how historically the U.S presidential elections correlate to the stock market.
Despite the FTSE hovering around a record 7000, UK government bonds have been undergoing a sell-off recently, investors may be fleeing the market due to Brexit uncertainty and expected inflation, due to a weak Sterling. This has caused bond prices to fall and therefore bond yields have increased.
The Office for National Statistics released data showing that the Consumer Price Index rose to 1% (this is the highest jump in nearly two years) in the year to September, exceeding expectations of a 0.8% rise. A large proportion of this acceleration in the rate of inflation was seen between August and September with a 0.4% rise in just one month.
FOCUS ON OIL
Oil prices have risen following an indicative decision made by OPEC in September surrounding a deal to limit production to 32.5 - 33 million barrels a day. On the other hand, some countries such as Libya, Iran and Nigeria are not part of the deal and may decide to increase their production thereby offsetting reductions from the other members.
Source: FE Analytics as at 17th Oct 2016
The table above shows the major equity indices movements for the given time periods; UK equities(FTSE 100), U.S (S&P 500) and Japan (Nikkei 225). These have all been measured in price in sterling pound. The FTSE 100, the S&P 500 and the Nikkei 225 has increased by the values stated under each time period. The U.S Dollar, Euro and Japanese Yen have all appreciated relative to the Sterling Pound. for example, the Yen has gained a significant 39.93% against the Pound Year to date as at, 17th October 2016