Politics and Economics will keep us on our toes

Well, we managed to survive May – that most capricious of months for investors.


Our own Footsie index managed to push into new high ground, as did indices in the United States. Indeed, the bull market on the other side of the Atlantic has now continued for over eight years, relatively uninterrupted. On the one hand, some sort of correction looks overdue. On the other, investor confidence is high so perhaps a settled summer is in prospect.

But we do have a general election taking place in a little over a week’s time. From looking like a Conservative landslide, the race looks like getting somewhat closer. A recent opinion poll even suggested a hung Parliament, which unsettled sterling, though not shares. Certainly, a week is a long time in politics and even longer if there is a vote at the end of that week.  It could be that, like the weather, the odd unsettling storm cannot be ruled out.

We are getting something of an economic steer as the Purchasing Managers’ Indices are published. These PMIs, as they are known, are considered to be a good guide to future performance. First out will be the numbers for the manufacturing sector, while following closely behind will be those from the construction industry. There is also important credit data from the Bank of England – crucial in building a picture of how confident we should be in the state of our economy as it demonstrates how willing people are to borrow and banks to lend.

This time of the year there is usually little in the way of corporate news to grab our attention, though BAs disastrous computer problems provided an unfortunate diversion. It looks as though we will have to await the outcome of next week’s poll before we can draw any meaningful conclusions on the market. Even America seems to have dropped out of the limelight for now, though that surely cannot last. Fingers crossed that there are not too many upsets – both politically and economically.

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