The Scottish Mail on Sunday
ANOTHER weekend in June, another headache for the Government and another quandary for investors.
Looming Brexit talks had already cast uncertainty over the UK economy. Now, with Theresa May falling dramatically short of the big victory she sought, prospects are even harder to predict.
Against this backdrop, the stock market might have been expected to show serious signs of worry. Instead, the response to last week’s drama has been relatively sanguine.
The FTSE100 index of Britain’s biggest quoted firms closed 1.04 per cent higher on Friday at 7,527.33, while the FTSE250 edged ahead by 0.13 per cent.
Contrast this with the day after the EU referendum last June, when the Footsie closed 3.1 per cent lower, the FTSE250 index was down just over 7 per cent and sterling slumped. Perhaps traders are getting immune to shock voting results here. Perhaps they have faith in the economy’s resilience. Or perhaps they are reflecting on what happened next, this time a year ago.
Within a week of the Brexit vote, the FTSE100 was bouncing back. Packed full of multinational companies, traders took the view that the index would benefit from the pound’s weakness.
And so it has proved. UK goods and services are now cheaper for foreigners, while businesses with a big presence in the US benefit from the dollar’s strength against the pound.
The FTSE 250 includes more domestically focused firms and it was still in negative territory a week after the referendum. But it soon rebounded too. Today, it is 13 per cent higher than last June, while the Footsie is about 18 per cent ahead.
For nervous investors, the data offers reassurance. It can also help to guide investment decisions, as Westminster wades through a sea of uncertainty.
Now is not the time to panic. A long view on shares is invariably the best path to take, particularly with wellestablished dividend payers that have a large overseas presence. Here, Midas looks at three such stocks – Unilever, Reckitt Benckiser and Diageo – and also at some builders and retailers that could come up trumps in these uncertain times.