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FTSE Outlook

dont_use_vistaprint
dont_use_vistaprint Posts: 990 Forumite
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in Savings & investments
If it becomes likely there will be soft brexit or brexit is cancelled, my understanding is GBP will recover most if not all its 10% loss its occurred since the referendum, and this will see the FTSE100 at around 7200 in a years time, because of the extra USD going into FTSE250, this helps FTSE100.

Does this make any sense or have I completely misunderstood?

How has FTSE100 both grown 12% and lost 0.3% in real terms.

Confused :-(
The greatest prediction of your future is your daily actions.
«13

Comments

  • masonic
    masonic Posts: 29,382 Forumite
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    edited 21 January 2019 at 8:53PM
    Why do you suppose the 10% loss, which also affected the USA, Emerging markets, etc, has anything to do with Brexit? And did you realise the FTSE100 rose in value immediately after the Brexit referendum and is up about 15% since then (including the recent 10% loss)?

    I don't think anything you have written above has any basis in fact.
  • Alexland
    Alexland Posts: 10,561 Forumite
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    edited 21 January 2019 at 10:59PM
    If Brexit is cancelled then the pound would strengthen reducing the value of FTSE100 company overseas earnings putting downward pressure on their share prices. Still there would be upward pressure from investors who might be avoiding the UK right now. Who knows how that would balance out.

    The main problem would be your overseas investments would also be worth less in pounds. Still if you eventually spend the money on imported goods they would be cheaper.

    Alex
  • dont_use_vistaprint
    dont_use_vistaprint Posts: 990 Forumite
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    Alexland wrote: »
    If Brexit is cancelled then the pound would strengthen reducing the value of FTSE100 company overseas earnings putting downward pressure on their share prices. Still there would be upward pressure from investors who might be avoiding the UK right now. Who knows how that would balance out.

    The main problem would be your overseas investments would also be worth less in pounds. Still if you eventually spend the money on imported goods they would be cheaper.

    Alex

    The upward pressure would come from a recovery of GBP ? Or just certainly regarding Brexit

    Why are FTSE250 and FTSE100 impacted so differently by the GBP ? Are smaller FTSE companies more likely to trade only in the UK?
    The greatest prediction of your future is your daily actions.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Is this just an academic question? Why does it matter what the FTSE does? It should only be a very minor part of your investments.
  • Alexland
    Alexland Posts: 10,561 Forumite
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    dont_use_vistaprint wrote: »
    The upward pressure would come from a recovery of GBP ? Or just certainly regarding Brexit

    The recovery of GBP is more likely to put downward pressure on FTSE100 share prices as their majority overseas earnings will be worth less pounds. Some may even need to issue profit warnings. Still there are probably investors avoiding the UK at the moment who may become buyers pushing FTSE100 and 250 share prices up.
    dont_use_vistaprint wrote: »
    Why are FTSE250 and FTSE100 impacted so differently by the GBP ? Are smaller FTSE companies more likely to trade only in the UK?

    FTSE100 companies are more likely to be international companies who have chosen to be based in the UK. FTSE250 companies are more likely to be domestically focused with earnings based on the health of the UK economy. Of course there are exceptions such as BT in the FTSE100 and several global investment trusts in the FTSE250.

    Alex
  • dont_use_vistaprint
    dont_use_vistaprint Posts: 990 Forumite
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    AnotherJoe wrote: »
    Is this just an academic question? Why does it matter what the FTSE does? It should only be a very minor part of your investments.

    No its not academic, just trying to understand how markets, GBP, inflation, base rates are impacted and relate to political factors
    The greatest prediction of your future is your daily actions.
  • westv
    westv Posts: 6,598 Forumite
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    masonic wrote: »
    And did you realise the FTSE100 rose in value immediately after the Brexit referendum
    That was after a 20% drop.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    dont_use_vistaprint wrote: »
    No its not academic, just trying to understand how markets, GBP, inflation, base rates are impacted and relate to political factors

    Better to focus on the actual financial performance of the companies themselves. Noise moves markets every minute of the trading day. Profitability determines whether the individual companies were worth investing in, in the longer term.
  • westv
    westv Posts: 6,598 Forumite
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    Today's close 6809 is the same number as it closed 25/2/14. Where has the time gone?!
  • Alexland
    Alexland Posts: 10,561 Forumite
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    westv wrote: »
    Today's close 6809 is the same number as it closed 25/2/14. Where has the time gone?!

    No idea but it doesn't feel like this country has become fundamentally better over the period either.

    If anything we might have gone backwards a bit which is maybe why it hasn't even gained inflation.

    Still there's the dividend income, it's much more complicated, etc.

    Alex
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