Cautious optimism amidst possible path to Brexit deal

15 October 2019

Cautious optimism amidst possible path to Brexit deal

The Weekly Note is brought to you by the ALPHA: r² discretionary service team.

Market news

There is cautious optimism that the path to a Brexit deal could be forming. All parties have been keen to stress that there is a lot of hard work to be done, but the rhetoric from the negotiating table has been more upbeat and contained fewer accusations. Talks yesterday may, according to some reports, have yielded a breakthrough on the Irish backstop issue. There is an EU summit later this week but the possibility of an extraordinary meeting next week has also been mooted.  


Meanwhile, Boris Johnson filled yesterday's Queen's Speech with pledges to be tougher on crime and improve the NHS. The programme is widely expected to be defeated in parliament next week but is being seen by many as a potential election manifesto.  


Sticking with domestic news, August's employment data disappointed onlookers. UK wage growth was 3.8% in August, which was below expectations, while unemployment ticked up from 3.8% to 3.9%. It was the biggest decline in employed people since 2015.  


A sudden decision from Donald Trump to remove US forces from northern Syria, announced last week, has led to a spike in geopolitical tension. Turkey quickly launched an attempt to seize territory from the western-backed Kurdish coalition, which has resulted in Washington imposing sanctions on Turkey and Trump threatening to destroy its economy.  


The development of trade talks between China and the US continues to lack material progress, but sentiment in Beijing has become more optimistic since the weekend. Domestically, China's consumer inflation has hit its highest level since 2013, rising 3.0% in September, primary driven by soaring pork prices in the wake of a disease outbreak.  


Last week, hopes of international deals being struck pushed global equities higher, as well as global sovereign yields. Sterling finished the week 2.67% higher against the dollar. 

 

Stock focus

The Woodford Equity Income Fund is to be wound up by its administrators, Link Fund Solutions, which has also removed Neil Woodford as its investment manager. The fund has been frozen since June, when it was unable to deal with a surge in redemptions. The sale of its liquid and illiquid assets will be handled separately.  


Sophos has accepted a $3.9bn purchase deal from the US private equity group Thoma Bravo, joining a growing list of UK companies taken over by a foreign buyer taking advantage of the pound's weakness. The cyber security software developer is being taken private at a 37% premium to last week's closing price.  


Schroders revealed this morning that its assets under management grew to £450.8bn by the end of September, up from £407.2bn at the start of this year, driven by its asset management and wealth management units. Given the performance of equity markets over that time, it suggests modest net inflows.  


The We Company, which recently aborted an attempt to list publicly, is considering proposals from Softbank and JP Morgan to provide much-needed cash and improve its fortunes. The value of the company plunged in just a few weeks recently amid concern over the financial information in its prospectus. It now faces giving up a controlling stake to one of the banks.  


A third of the world's largest banks have failed to sign up to a climate change initiative backed by the Bank of England. The Task Force on Climate-related Financial Disclosures (TCFD) is an initiative for companies to calculate and disclose their exposure to climate risk. Those yet to support include many from China, as well as Commerzbank and Wells Fargo, amongst others.  

 

The Weekly Note has a new look!

Subscribe today and email [email protected] to register your interest, and receive the full Weekly Note in your inbox every Tuesday.

 

Walker Crips
Old Change House
128 Queen Victoria Street
London EC4V 4BJ

020 3100 8000
www.wcgplc.co.uk
[email protected]

 

Important information

This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.

Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.

Cautious optimism amidst possible path to Brexit deal

Important note

No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.

Walker Crips Investment Management Limited (WCIM) is a member of the London Stock Exchange and is Authorised and Regulated by the Financial Conduct Authority (FCA).

This website is solely for information and private circulation and does not constitute an offer to buy or sell shares in any company mentioned herein. References to Walker Crips refer to Walker Crips Investment Management Limited and/or other companies within Walker Crips Group plc. It is important to remember that the value of investments and the income from them can go down as well as up and investors may not realise the value of the initial investment. Recommendations may or may not be suitable for all recipients of this publication and if you have any doubts you should seek advice from your investment advisor. WCIM cannot accept responsibility for any losses which may be incurred by anyone acting on such recommendations. The value in sterling terms of foreign investments may rise or fall in response to currency fluctuations.

It must be noted that information concerning past performance is not a guide to future performance. In line with the FCA rules on conflicts of interest, investors should be aware that Walker Crips may have actual or potential conflicts of interest that could affect the objectivity and independence of their research. Where such conflicts exist it is Walker Crips’ policy to disclose them publicly. Principals and Associates of WCIM may have held a long term position in some of the stocks or shares mentioned herein. Consequently, in line with FCA Rules on conflicts of interest, WCIM research in these areas cannot be classified as impartial within the FCA’s definition and should not be relied upon as independent or objective. Prices and factual details are deemed to be correct at the time of publication but may change subsequently. The publication has been prepared with all reasonable care and is not knowingly misleading in whole or in part. Expressions of opinion are subject to change without notice.

Investors are strongly advised to consult with their own Broker / Account Executive to discuss risk levels and whether a particular investment is suitable for their financial circumstances.

Opinions expressed by individuals within this website does not necessarily represent the views of the Company.

Please indicate that you agree with the statement below to continue

If you do not agree with the above statement and have questions about our service and products please contact us on 020 3100 8000.

Display disclaimer

Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.


Walker Crips Group plc (Old Change House, 128 Queen Victoria Street, London EC4V 4BJ), registered in England, registered number 1432059, incorporates the following companies which are authorised and regulated by the Financial Conduct Authority: Walker Crips Investment Management Limited registered in England number 4774117 member of the London Stock Exchange, Walker Crips Wealth Management Limited registered in England number 3790291, Ebor Trustees Limited registered in England number 3514268, Barker Poland Asset Management LLP registered in England and Wales number OC341149.