HERE we are in the new financial year and all the possibilities that it might bring. Last week the market (as measured by the FTSE 100) broke out of its trading range, rising convincingly above 6,300 although momentum faltered towards the end of the week.
We are beset with so many influences and information to absorb, much of it contradictory, that it is in all truth hard to know how to be positioned. This is reflected in the market as despite the relatively strong stock market performance, the price of gold is also holding up well, usually an indication of investors seeking safety.
The major uncertainty overhanging the market is clearly the referendum in June, now dominating headlines and politicians’ thoughts.
Last week we saw a downbeat assessment of the global economy from the International Monetary Fund, which included a downgrade of growth prospects for the UK, and indeed China was one of the very few countries to be given an upgrade – an event that would have previously been greeted with much more attention, were it not for all the other factors swirling around.
Continuing on a global theme, the much vaunted discussions in Doha which were attempting to reach the first global oil deal in 15 years, failed to reach an agreement at the weekend to freeze production. The oil price had risen in anticipation, but at time of writing is slipping down again.
Eight years ago we were just heading into the financial crisis and it would have been virtually unthinkable then that we would not be back to what we all thought of as “normal” so many years on.
The global growth rate then was 4 per cent (now a modest 2.5 per cent is forecast by the IMF), dividends were (relatively) plentiful and money on deposit still earned interest.
Last week also saw shareholder unrest as BP suffered a shock defeat in its pay deal for the high profile chief executive and there is likely to be more dissent as substantial increases do not sit easily when share prices have fallen.
In such a tumultuous scenario it is very hard to know what to do: there is certainly no magic solution and at risk of being repetitive, investors should concentrate on fundamentals and exercise all their powers of patience.
:: Cathy Dixon is a director at the Belfast office of Cunningham Coates Stockbrokers, which is a trading name of Smith & Williamson Investment Management (SWIM)
