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Anita Tanna, Head of Equity Sales, EMEA, explores the outlook for UK markets, in particular any nuances between the FTSE 100 and 250.
Over the last four-to-five weeks, there has been a rally on risk assets, particularly on the FTSE 250, offering a greater indication of the underlying trends in the UK economy than the FTSE 100 - which has more international exposure.
In the short term, a tighter plan from the UK Chancellor offers stability for markets and the risk rally could continue, however the medium term consequences can begin to bite into economic growth, consumer activity and a knock on for corporate earnings.
With sterling falling to record lows following the announcement of the Truss/Kwarteng Mini Budget, foreign investors saw opportunities for valuable equity buys. The recent rally in the pound could curb that attractiveness across the FTSE 250 but conversely could offer alternative pull factors in the FTSE 100 as sectors there include consumer staples, healthcare and energy that have benefited from geopolitical circumstances.
Should investors be optimistic for 2023? In the short term there is a lot of fear, however one data point doesn’t suggest a deflationary trend. Analysts are looking to future prints to establish what may lay ahead.
About the expert
Anita Tanna
Head of Equity Sales, EMEA