The get Brexit done mantra is proving as popular with UK equities as it did with British voters as the post-election euphoria continued, making the FTSE-100 one of the best performing indices over the week.
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Week ending 20th December 2019.
23rd December 2019
UK equities were also helped by a weaker pound caused by a new law guaranteeing the Brexit transition with the EU will not be extended beyond December 2020. In fact, the pound has now erased all of last Thursday’s (12 December 2019) election rally, ending the week at $1.3021.
UK CPI inflation was unchanged in November at 1.5% – matching the smallest increase since November 2016 and well below the BoE’s 2% target. Looking ahead, UK inflation is likely to be restrained by the strength of the pound since it bottomed at $1.206 in August 2019 (as a stronger pound reduces the cost of our imports). However, this did nothing to sway the BoE policymakers, as yesterday (Thursday 19 December 2019) they voted 7-2 to leave UK interest rates unchanged.
Elsewhere, in the US, the House of Representatives voted to impeach Donald Trump. While this has been headline news around the world, equity markets have been able to brush aside the whole affair as it is the Senate that decides whether Donald Trump (a Republican) should be convicted and removed from office – and the Republicans control the Senate (the upper chamber), whereas the House of Representatives (the lower chamber) is controlled by the Democrats. As such, he is almost certainly going to be acquitted – and in the process he is likely to become the only impeached president to win his party’s nomination for re-election!
It is obviously a quiet period ahead in terms of data releases. The main announcements being US durable goods orders and Japanese retail sales and unemployment.
As news on the markets tends to quieten over the holiday season, our next Weekly Market Summary will be Monday 6th January 2020. We will of course provide you with a Market Update if any major changes or events happen in the meantime.
Best wishes for the festive season and the year ahead.
Investment Management Team
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