UK Stocks Struggle in World League Table
The UK’s stock markets are on track for what could be the worst performance in the developed world for 2017, and analysts fear that the record-breaking levels seen in the USA could crash during 2018.
After a bumper 2016, which saw the UK’s biggest stocks climb by 14 percent, the UK’s leading index has seen just a 3.5 percent gain this year, while the Down Jones is up by 3.5 percent, and the DAX is up by 15 percent. The rest of the world is enjoying a bull market, but the FTSE 100 is being held back by weak overseas earnings thanks to the pound’s gains, and fears over the outcome of the Brexit negotiations.
Meanwhile, the Fed is cutting government bond holdings and increasing interest rates - this means that a lot of debt has been taken out of the system, quantitative easing is helping for now but the situation won’t remain like that forever. US and European governments will keep borrowing, but as quantitative easing slows down that means that there is the potential for a serious hit to the markets. If the markets perform as badly as some fear - a dip of as much as 20 to 30 percent - then the economy could be plunged into a recession. We may be lucky, with euphoria for this year offsetting some of the fall, but banking on emotion to hold up the markets is never a good thing, and it could be time to start looking at diversifying our portfolios.
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