Well it is that time of the month to make a 6 month forecast for FTSE100.
The table below summarises our forecasts so far this year. We note that our target date 6 months hence is 16 September 2019. Which, of course is the Monday after the St Leger’s Day meeting at Doncaster. So we expect the market to be very well bid – by all the people who went away in May – and missed the huge summer rally.
So what do we know will happen between now and St Leger’s Day? Well the real economy does seem to be in a soft patch in the UK, and is also slowing in all the main world economic drivers. The EU is flirting with recession (ha, does that mean it has its come-hither eyes and is flicking its hair?) China appears to have softened but isn’t heading for a blow-up. Even the US seems to be losing some of the sugar-rush from last year’s tax cuts. So, looking on the bright-side, it feels like interest rate rises are off the agenda everywhere, which will keep the relatively high yields from shares looking attractive. FTSE100 is yielding 4.46 as of today – from dividenddata.co.uk.
So what else is there that could possibly affect UK share prices coming up this summer? Anything in the world of politics?
Oh yes, well there is Brexit! It may seem an odd thing to say, but slowly the muddy water in our crystal ball is settling like the flakes in a snow-shaker dome. I love to mangle a metaphor.
We’ll review the Brexit alternatives tomorrow, but to summarise, by September we’ll either have left, be in a transition period of Mrs May’s Deal, or be in a long postponement. So in all cases the immediate threat to UK equities will have disappeared.
Under all of those scenarios, hopefully the stock market can get back to doing what it does best – ignore the real world and live by rumour and counter-rumour.
So we continue to believe that the late spring will bring a relief rally to UK equities. Anyone who leaves it until St Leger’s Day will have missed the boat.
We forecast that on 16 September, FTSE will close at 8150.
Now this is really more foolhardiness that most economists show, but here are our forecasts so far this year;
Date of Forecast FTSE Then Date for Forecast FTSE Forecast
15 January 2019 6855 15 July 2019 8050
12 February 2019 7129 15 August 2019 8050
18 March 2019 7228 16 September 2019 8150
We’ve even added the links to our earlier articles. How brave/foolish is that???