22 September 2014

Market comment: a personal view 19th September

Shares had run out of steam ahead of the Scottish referendum vote - hardly surprising given the disruption a Yes vote would have generated

In the event, the Better Together campaigners prevailed and the outcome was sufficiently clear for the issue of complete independence to be consigned to the back burner for the foreseeable future. There will have been more than a few sighs of relief over the outcome – and not just from politicians and businessmen here in the UK. I dare say smiles will have returned to leaders in the US and the EU - particularly Spain which is facing its own internal calls for a breakup of the nation.

Markets reacted positively to the news, with sterling reaching a two year high against the Euro and shares in London bouncing back. They were helped by a buoyant Wall Street, which saw its leading indices move into new high ground. With the Chinese online retailer, Alibaba, coming to the market amidst a frenzy of demand and company results painting a promising picture, it seems investors are prepared to ignore the geo-political issues that could still upset the apple cart.

However, it is fair to say that the Union is unlikely to be the same again, even with Scotland remaining part of the United Kingdom. Already the Scots have been offered greater autonomy, so a growing divide between how this nation conducts itself compared with the rest of the UK is inevitable, unless Mr Cameron succeeds in delivering the reforms he has promised in the wake of the result – quite an ambitious target.

At least retaining the Union will mean that those companies that threatened to relocate their head offices to England can put such plans on hold. And we can all return to worrying about issues that are arguably more relevant to economic performance. One very big uncertainty has been removed. Let us hope it is not replace d by another in the form of escalating conflict in those areas of the world already troubled.

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