The uncertainty over Brexit goes on – and so our FTSE Forecast goes down. We are promised that 31 October is a hard deadline – er haven’t we heard that before?
For the last three months, we’ve been working on the idea that in each case Brexit would be over and done within the 6 months of our forecast. For that to happen this time, we have to believe that Mrs May can get her deal approved at the 4th time of trying. So we will work on the basis that Brexit is still on-going by October.
What else do we see? The US economy looks a little fragile, which is not fully priced in. Europe looks very fragile. China continues to kick the debt-can down the road. (Is a debt-can like a petrol-can, but potentially more explosive?) But of course weaker economies mean no interest rate rises. Oil is being bid higher, but not in a way that threatens inflation taking off.
We don’t see earnings crashing in US, so we continue to think shares will trend slowly higher – but the UK market will not do as well as it would have done had Brexit been resolved one way or another.
Previously, we saw FTSE100 at 8050 for July and August and 8150 in September. See our articles here. However, we think that the 50% move towards those levels is as far as it is going. This morning, FTSE is 7442. For October, we forecast FTSE100 at 7600.