All change at the top

Although the FTSE 100 has retreated a little from the 7600 plus it achieved in recent days, it is still holding up remarkably well.

Of course, US markets hit fresh highs last week, buoyed by robust economic data, as a consequence of which doubts emerged as to whether the Federal Reserve Bank will raise interest rates this month. After all, equities have been strong and unemployment there is at a record low. The Fed chairman’s semi-annual report suggested a dovish approach would be maintained, presumably because Jeremy Powell is under pressure from President Trump, so a rate cut still looks on the cards.

Company news is somewhat thin on the ground. We now know that the devastating fire that destroyed Ocado’s Andover warehouse last February had a severe impact on the business, though they hope to recoup the cost from their insurers. Deutsche Bank is in the news as it restructures following a long period of under-performance. The problem arises from its investment banking side not reacting sufficiently swiftly in the wake of the financial crisis of more than a decade ago. City jobs are going as a consequence.

At least there seems more hope of peace breaking out between the US and China, following the G20 meeting in Japan, though the revelations that have come from the British ambassador to the US suggests that nothing should be taken for granted in the Trump administration. And Amazon is 25 years old! It is remarkable how swiftly this company has transformed the retail industry and made its founder, Jeff Bezos, into the world’s richest man. It all goes to show how quickly things can change these days. Investors need to bear that in mind.

The summer is always a difficult time in which to reach firm decisions on how to position an investment portfolio. Markets tend to be thin in trading terms. Once the second quarter results are out of the way, company declarations enter a period of extreme quiet. Even merger and acquisition activity tend to dry up, though the weakness of sterling looks likely to see still more bargain hunting from abroad. With new people in charge in Brussels and a new Prime Minister due to take over the reins soon, even the course of Brexit looks unclear. Perhaps the best advice to investors is to enjoy the summer and hope everything will sort itself out in the long run.

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