29 April 2014

Market c omment: a personal view 29 April 2014

Despite the situation in Ukraine remaining worryingly volatile, shares have regained some of their composure

 But with takeover fever in the air, investors were encouraged to get the week off to a good start. The story that US drugs giant Pfizer was interested in swallowing AstraZeneca had been around for some time. Apparently they first made an approach back in January, but AstraZeneca broke off initial talks. The announcement from Pfizer suggests they are now prepared to talk direct to shareholders. If it goes ahead, it will be the biggest ever foreign takeover of a British company.

There is plenty else happening for investors to take into account. The Federal Open Markets Committee – the body that sets interest rate levels in the US – has held its regular monthly meeting. All eyes were on any changes to the policy on the tapering of monetary easing. With the Americans cutting back on its bond buying programme, any acceleration of this process would deliver a mixed message - a strengthening economy, but less cash around.

And a stronger economy is what Britain’s bosses are expecting. The Confederation of British Industry announced the results of its monthly survey which suggested a particularly favourable outlook for the quarter ahead – optimism subsequently confirmed with a 0.8% increase in first quarter GDP. Put together with the mega bid that the Pfizer announcement could presage, and investors have felt able to shrug aside geo-political unc ertainty and mixed profit messages.

So, with a rush of companies declaring results in the weeks ahead, and a number of economic indicators also likely to affect sentiment, investors could be forgiven for taking advantage of a better tone for shares to bank a few profits. After all, May is just around the corner and for some that old adage – Sell in May and go away – still has a resonance. If only investment were that simple. We still have some way to go before markets look over valued.

Brian Tora, who is a respected writer and broadcaster on investment issues, is a consultant to JM Finn & Co. Brian has enjoyed a long and distinguished career in the City. Any opinions expressed are his own and should not be construed as advice from JM Finn & Co. A version of this article may appear elsewhere in the press

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