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.
Can the bull run last?
It has been an untypically strong start to the year for stocks in 2017. The usual Santa Rally is extending well into the New Year and the FTSE 100 is in previously uncharted territory above 7,200, supported in part by renewed Brexit-inspired weakness in sterling.
The latest edition of The Harriman Stock Market Almanac says ‘…historically the euphoria of December (the strongest month of the year) carries over into the start of January as the market continues to climb for a couple of days. But by around the fourth trading day the exhilaration is wearing off and then the market falls for the next two weeks…’
We’re now six trading days in, at the time of writing, and there is no sign of a reversal. The question for investors is, can it continue?
The short answer is, nobody knows. Analysts at Goldman Sachs, for example, see the index reaching 7,300 by year end. Credit Suisse see the index ending 2017 at 7,000; others are even more pessimistic.
AJ Bell investment director Russ Mould says investors need to keep their eyes on four key sectors which are expected to deliver 76% of the pre-tax profit growth for the FTSE 100 index this year: banks; insurers; mining; and oil and gas producers.
He says all four sectors need to deliver the expected profit and dividends in order for the FTSE 100 to keep performing strongly.
‘All four are suited by the market’s current preferred narrative, namely that economic growth and inflation will accelerate in 2017, thanks to a shift from austerity to fiscal stimulus, particularly in the USA under president Trump but also potentially in Japan, Canada, the UK and others.’
There seems a better than even chance Trump will fail to deliver on his agenda, putting the performance of these sectors at risk, in our view.
Shares will steer you through any ups and downs in 2017 with commentary every week in the digital magazine and daily on our website to ensure you remain one step ahead of the pack.
We were inundated with people wanting to go the football by entering our Christmas competition for Arsenal tickets. There can only be one winner – and that’s Phil Gerrard who correctly identified Watford FC, Arsenal and Manchester United as among the football clubs which have traded on a UK stock market now or in the past.
Congratulations to Phil and commiserations to everyone else who entered our competition.