On our way to the polls

Markets have largely ignored the opening shots in the battle for the electorate’s votes.

Of more concern to international investors is the state of the trade talks between China and the US. The belief remains that a deal of some sort will be reached, but it is taking a while to get there. President Trump received a warm welcome when addressing the Economic Club of New York, while Jerome Powell, the chairman of the Federal Reserve Bank, has also been pronouncing on central bank policy. The pressure to lower interest rates remains, which also does sentiment little harm.

Back home there has been a modest slowing in the rate of wage growth here, but it is still higher than inflation. Unemployment has also fallen. Could this be a sign that workers from the European Union have been returning home ahead of Brexit? Hard to say, but there is little sign of an economic collapse, even if growth is definitely moderating. Meanwhile, talking of the rise in the cost of living, inflation figures published recently had little to give investors concern. As it happens, there is little else of economic importance on the immediate horizon, so perhaps shares can retain their largely positive behaviour.

The closer we get to the election, the more the expected outcome will influence investor thinking. Nigel Farage’s volte face on fielding candidates in Conservative held seats will not have done Boris’s chances any harm and we may not have seen the end of this particular story. Whether the Remain pact will help or hinder is far from certain, but it does serve to demonstrate how divided the nation has become. This could turn out to be the most controversial election any of us will have seen.

Continuing on the election front, the war of words continues, with both the main parties vying with each other over spending plans and endeavouring to rubbish the other’s arithmetic. It would not surprise me if this particular election had the lowest turn out in modern times, which is not a comforting thought, given the divisions that exist. Initial signs are that support is polarising towards the two principal contenders, but we probably shouldn’t underestimate the disenchantment the public has developed to our ruling classes in Westminster.

While some introversion is inevitable at times like this, we must not forget the wider scenario. The global economic picture is one of slowing growth which may be only partly alleviated by a Sino/American deal. Other issues are gaining momentum – climate change, the harmful influence of discarded plastics on our eco-systems, the future of the US President - to name but three. We are approaching the period of good cheer when traditionally shares prosper. Let us hope this year is no exception.


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