May correction looms for the FTSE 100
My reading of UK stock market sentiment is largely the same as it was in late March. I moderately downplay the capability of the run-up […]
My reading of UK stock market sentiment is largely the same as it was in late March. I moderately downplay the capability of the run-up […]
My reading of UK stock market sentiment is largely the same as it was in late March.
I moderately downplay the capability of the run-up to the UK election to seriously spook investors in FTSE 100 companies, partly due to the strong multinational character of the UK benchmark.
But the UK blue-chip market isn’t entirely immune to British currents.
Sterling has a visible impact.
However even the main exchange rate with the pound has provided a largely positive input to the UK stock market so far this year.
Cable tacked on about 4% in April, but remained short of highs of February and nowhere near cycle highs of July 2014.
This implied a tailwind for exporters and an additional fillip for consumption amid ‘zero’ UK inflation in March and April.
I agree that sterling will remain the main arena in which election-related market caution is reflected, underlining the balanced case for blue-chip stocks in May.
Essentially, sterling has not recently hindered the FTSE 100’s room on the upside.
However, there were signs that a correction had started as May got underway on Friday 1st.
Therefore, I read the FTSE’s comedown as more of a logical postscript to three consecutive monthly record highs than a reaction to the probably inconclusive UK election.
FTSE 100 chart using 10-day intervals