The next 12 months will be an uncertain world, with a busy political period with the US Presidential Election, continuing Brexit, and Elections in France and Germany. We expect much market volatility due to these events.
In recent decades, political events have had a limited influence on financial markets. But this is could be changing, particularly as we approach the US presidential election on 8 November.
The Euro was the biggest loser this week giving up almost 2% against the pound and 1.5% against the US Dollar. The majority of this move followed the European Central Bank meeting press conference with President Draghi. After initially confirming the ECB governing council did not discuss extending the QE program leading to a jump in the Euro value, he quickly undid this work by confirming that they did not discuss tapering the program either.
No rest for the pound.
Sterling is still feeling a lot of downward pressure. Against the mighty USD we could not get near the 1.23 level and against the Euro it was difficult to move above 1.11. In the last 4 months we have now seen over a 15 percent decrease in the pounds value.
In the three months since the European Union referendum in the UK, there has been little impact other than the change of Prime Minister and the weakness in Sterling.
The FTSE 100 recovered quickly and even the FTSE 250 has regained its pre-vote levels, confounding the warnings from a range of experts. However, performance has diverged between companies with substantial overseas earnings and those which are more domestically-exposed.
Brexit will take several years to come to fruition. During this time, economic growth may slow because of uncertainty, but we do not expect a recession. So far, leading economic indicators confirm this. However, this period could be difficult, with politically-driven volatility shaping the investment landscape.
For many expatriates, their pension income is the key to living the retirement lifestyle of their choice. Now that Brexit is imminent, should you have concerns about your pension security? Here we take a look at the key implications for the State Pension, defined contribution schemes and defined benefit or ‘final salary’ schemes.
Losses of two thirds of a yen, a quarter of a Swiss cent and nearly one US cent pushed the euro into the back end of the field: only the Northern Scandinavian crowns, the pound and the South African rand had a worse run. The euro did nothing particularly wrong: most of the economic data from Germany and pan-Euroland beat forecast. It was just that investors' attention was elsewhere. It was on the United States, where it continues to look likely that interest rates will go up in December. And it was on Britain, where the referendum result continues to cripple sterling.
The key event since our last Wealth News has, of course, been Brexit. Some readers may find these exciting times for the UK, as it prepares to leave the EU, others may be concerned about what the future holds. Either way, it could be some time before we get clarity on how the new relationship between the UK and EU will evolve, but in the meantime we can take a look at how Brexit could affect your tax and estate planning in Portugal, as well as your investments and pensions.
In global terms it was a mediocre week for the euro. It lost half a Japanese yen and three quarters of a US cent. That was despite a half-cent jump on Tuesday after investors seized upon the almost certainly erroneous idea that the European Central Bank is about to begin winding down its asset purchase scheme. Uninvestable banks’ lending less money is not at all what ECB monetary policy aims to achieve. So investors put two and two together and, bingo! The ECB must be preparing the way for an early end to the QE scheme! The euro jumped a cent higher against the US dollar.