We’re now in September, yet there are still plenty of headlines filled with stories about the potential fallout from the Brexit vote. Everyone is keenly watching economic data to see what the indicators reveal about the effects of the referendum. Indeed, the Bank of England has acted pre-emptively with a rate cut to a record low. On a general level, for every positive there is a negative and whilst mortgage rates across the UK have fallen, savers are having to accept some of the lowest yields they’ve ever faced. Further more, the lower pound has apparently boosted exports as we see UK manufacturing gauges approaching relative highs.
Two months on, we’re starting to get a clearer picture of how global markets have reacted.
In the wake of Britain’s referendum decision to leave the EU, financial markets reacted erratically. UK equity indices initially suffered a blow but soon recovered and the FTSE 100 is now approaching all-time highs (up 7.85% 1st June – 24th August) on the back of the confidence inspired by Bank of England support and a weaker pound summoning increased foreign investment.
European equities weren’t quite as positive with the EURO STOXX 50 for example, still below pre-Brexit result level.
US equity indices reacted similarly with an obvious sharp fall in the aftermath but a steady recovery in the following months to reach all-time highs.
The Shanghai Composite meanwhile, reacted much more modestly and continued a steady moving average of positive growth both pre and post-Brexit.
Our consistent theme to investors holds true; Diversification.