In the short-term, the Trump Presidency has buoyed the UK and global equity markets with potentially reflationary announcements.
These have included shifting the focus from austerity, debt and deflation to growth and inflation with a significant inflection point in the yield curve. The catalyst for this change has been the promise of infrastructure spending, tax cuts and de-regulation. The strength of the US economy and rising oil price is supporting the US dollar, which is resulting in large currency gains for UK companies with significant overseas exposure. UK energy companies and banks have been notable beneficiaries of Trump to date and the tide has turned against ‘bond proxies’, such as consumer staples.
Longer term, as Trump’s irascibility and protectionist polices are exposed with reality failing to match heightened expectations, volatility and a market correction are likely. In particular, most global markets are currently at historical highs and valuations in most sectors look stretched. This may tip the balance in the UK towards more domestically focused companies, which could surprise to the upside if the UK economy exceeds muted Brexit expectations.
Please note, this article is for information only and does not constitute investment or tax advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise; pension rules and tax legislation are subject to change; we do not give tax advice. If you would like investment or pension advice on your individual circumstances, please do not hesitate to get in touch on 01392 875500 or info@SeabrookClark.co.uk