Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
“It is fair to say that 2019 is proving to be a fairly frustrating year for investors in large cap UK equities,” says AJ Bell Investment Director Russ Mould.
“While some decent gains were made from the FTSE 100 at the start of the year, the blue chip index has spent most of 2019 in a fairly narrow trading range of approximately 7,100 to 7,500.
“Yes, you could have made money buying at the low and selling at the high. But the average investor, who wants to keep their money invested and not have to constantly trade, will have been frustrated at how the market is taking one step forward and one step back on a repeat basis.
“Now approaching the final two months of the year, the FTSE 100 starts the new trading week in retreat with a 0.2% decline to 7,307. HSBC was the biggest faller after a disappointing update. Also dragging the index down was a sell-off in telecoms group Vodafone, weakness in consumer goods giant Unilever and a dip in banking group Lloyds.
“If the FTSE 100 has been frustrating this year, the FTSE 250 has been slightly better in terms of performance despite having a greater proportion of UK-facing stocks which face Brexit uncertainty. The latter is up 14.4% this year versus 8.4% from the FTSE 100.
“Sterling remains the barometer for Brexit from a market perspective and the currency today advanced 0.1% against the US dollar to $1.2842, suggesting that so much potential bad news has already been priced in or investors are relatively calm as they await the next step in the Brexit saga.
“Last week the FTSE 250 hit a 12-month high as investors started to regain confidence in UK stocks in the hope that some clarity around Brexit would remove the uncertainty previously clouding the market. Ultimately investors just want to know what’s going on, rather than having to constantly guess.”
HSBC
“Just as it is very hard to turn around a super-tanker in midstream, management are finding it very difficult to achieve a change of direction at Europe’s biggest bank HSBC.
“Its first quarter update is the latest evidence of that situation and given the sorry showing across several metrics it is little surprise the shares have sunk.
“Profitability is under pressure, impairments are up, the company has returned to negative ‘jaws’ or in other words costs are rising higher than income, and the return on equity target for 2020 has been abandoned.
“This is hardly an auspicious start for Noel Quinn, who as acting chief executive officer is auditioning for the role on a permanent basis.
“Given a difficult backdrop and the short time he has been in post a little patience is probably required but, in an unforgiving corporate world, he might not get a second read.
“A renewed restructuring effort is in chain, with the aim of simplifying the business with further details expected at or around the full year results.
“However, along with the herculean task of bringing simplicity to a business as large and complex as HSBC, the bank has no control over factors such as a US-China trade war, Brexit and the escalating political tensions on its home turf in Hong Kong.”
These articles are for information purposes only and are not a personal recommendation or advice.