4 June 2014

Market Comment: a personal view 4th June

While US markets have moved into new high ground, our own FTSE 100 Share Index still remains below the peak level of nearly fourteen and a half years ago – but not by a great deal

As it happens, little news is due over the next few weeks that seem likely to make much of a difference either way. Mortgage approvals continue to fall, but this has yet to make any impact on the robust nature of the property market in the South East. Cash is apparently falling further out of favour as shoppers switch to plastic to pay for their goods. And fears continue to grow that China’s long run of breakneck growth is coming to an end. Both the Bank of England and the European Central Bank will be pronouncing on interest rates very soon. No change is expected in the rate here, but many believe the ECB will cut their rate to just 0.1%. Not only is economic growth fragile in many European nations, but the possibility of deflation does seem to demand action. Some believe that quantitative easing of some description may also be adopted. Hopes are high for positive action.

Such other economic data as will be made available is unlikely to impact on markets, while we are in something of a dead period for company news too. Indeed, it almost feels as though markets are winding do wn to take an early summer holiday.

Perhaps the most exciting development of the next week or so will be the launch of Neil Woodford’s new fund. The departure of Mr Woodford from Invesco Perpetual was announced last year and caused quite a stir. Considered by many to be one of the best investment managers in the UK, he had accumulated several billions of pounds in the funds under his care, primarily under an equity income mandate. Such is the support he appears to have gathered that his new fund launch could be the biggest ever for an open-ended fund. Much will be riding on how he performs in the future.

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