60 seconds on the outlook for equities after the UK election

The period following Brexit is likely to be turbulent for the FTSE but there will be opportunities to buy cheap stocks.

08/06/2017
Downing-street-whitehall

Authors

David Docherty
Investment Director, Thematics

Initial flight to safety

The initial reaction of the market has been a flight to safety whereby the market has been buying stocks with international earnings.

These stocks have outperformed so far, meaning the FTSE 100 has actually gone up.

In contrast, some of the mid-cap, domestic, cyclical stocks have suffered. This is because the market is concerned the weakness in sterling will impact their margins and also the spending power of their underlying customers.

Could sterling strengthen?

Looking forward, there is a prospect of sterling strengthening at some point, possibly if markets decide that reflation could result from the government loosening the purse strings.

The other thing markets will have to calibrate is to understand better the prospect of a Labour government at some point. In so doing they will need to understand their policy on nationalisation, regulation and other intervention.

Take advantage of volatility

As always with these political events - and we’ve had many of them in the last year or so - what we try to do is to take advantage of market volatility to buy companies trading on cheap valuations

Subscribe to our Insights

Visit our preference centre, where you can choose which Schroders Insights you would like to receive.

Authors

David Docherty
Investment Director, Thematics

Topics

Equities
UK
David Docherty
Politics
Video
Podcasts
Follow us

Please remember that the value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

This marketing material is for professional clients or advisers only. This site is not suitable for retail clients.

Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security / sector / country.

Schroder Unit Trusts Limited is an authorised corporate director, authorised unit trust manager and an ISA plan manager, and is authorised and regulated by the Financial Conduct Authority.

On 17 September 2018 our remaining dual priced funds converted to single pricing and a list of the funds affected can be found in our Changes to Funds. To view historic dual prices from the launch date to 14 September 2018 click on Historic prices.