Written by David Jones, Chief Market Strategist at Capital.com
The UK stock market has started 2019 as nervously as it ended the previous year. In early trade it was down over 100 points – it has since recovered some of those losses. But stock markets go into the New Year still vulnerable to sell-offs.
There were some impressive one-day gains by US indices in December – but this does little to change the tone set in the last quarter of 2018.
Concerns about trade tariffs still dog investor sentiment – and the feeling is that, after 10 years of rising markets since the financial crisis, that companies have just got overvalued. January can often set the tone for the rest of the year – and this one looks to have the potential for the same levels of volatility experienced in recent months. Investors have been only too willing to hit the sell button at the first signs of a market wobble.
The pound had enjoyed a modest recovery in the last few weeks of 2018 – rising by around 3 cents versus the US dollar. This was no doubt helped by most of the UK’s politicians being away on holiday, so there was very little Brexit-chatter to spook the pound. As the working year starts to get underway, the pound is once again expected to be buffeted by the resumption of the Brexit debate ahead of the planned leaving date in March.
One market that continues to shine is gold. The precious metal has gained by around 10% since the August lows and, with other markets continuing to be rocked by uncertainty, gold could well continue to appeal to investors looking to trade in a possibly less volatile market.
*This is market commentary information, therefore it shall not be regarded as investment research or investment advice. Also note that past performance is not reliable indicator for the future.