The Scottish Mail on Sunday

If there is may­hem in mar­kets, fo­cus on the long term

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THE most ex­treme re­ac­tion to the first in­di­ca­tions of the Gen­eral Elec­tion re­sult was in the cur­rency mar­ket, where the pound fell against the dol­lar be­fore ral­ly­ing slightly. The worry is that ster­ling could fall fur­ther if the UK gets a bad Brexit deal.

Fig­ures from cur­rency spe­cial­ist FairFx show the pound dropped against 158 dif­fer­ent cur­ren­cies on Fri­day morn­ing.

But, while that might be bad news for any­one head­ing off on hol­i­day, it is a boon to com­pa­nies which make up the FTSE100 In­dex. Around three­quar­ters of the earn­ings of th­ese firms are made over­seas, so if the pound is weaker their prof­its are boosted. As a re­sult, the Foot­sie closed on Fri­day higher than it started.

More pain will be felt by those com­pa­nies which have most of their op­er­a­tions in the UK.

The FTSE250 In­dex dropped al­most 0.75 per cent on Fri­day morn­ing. This was largely driven by fears that th­ese busi­nesses could strug­gle if the econ­omy slowed as a re­sult of the un­cer­tain elec­tion out­come. But it too closed the day slightly up.

With a hung Par­lia­ment and the pos­si­bil­ity of yet another Gen­eral Elec­tion on the hori­zon, in­vestors should be pre­pared for stock mar­ket volatil­ity over the com­ing weeks. But it is im­por­tant to try to ig­nore any short-term rises or falls in the stock mar­ket and stick to a long-term plan.

Mark Dampier, head of in­vest­ment re­search at Har­g­reaves Lans­down, says: ‘I would urge in­vestors to re­sist the temp­ta­tion to make knee-jerk re­ac­tions as a re­sult of Fri­day’s elec­tion out­come.’

Adrian Low­cock, in­vest­ment di­rec­tor at as­set man­ager Ar­chi­tas, says: ‘Po­lit­i­cal up­heaval can bring into fo­cus any short­com­ings in your in­vest­ment port­fo­lio, so it is a good op­por­tu­nity to re­view your fi­nances.’

 ??  ?? SHOCK: The pound fell sharply on Fri­day morn­ing af­ter the re­sult
SHOCK: The pound fell sharply on Fri­day morn­ing af­ter the re­sult

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