Quite where the enthusiasm has come from is not clear, though the publication of President Trump’s tax cutting plans shows that some of his campaign promises might get more of an airing. At least the political party conference season has drawn to a close, allowing us to get on with the business of trying to work out what the future might have in store for us.
Perhaps it is the absence of any bad news that is permitting sentiment to recover. It is, after all, the very beginning of the last quarter of the current year, so far too early for meaningful statistics to emerge. Indeed, there is little for investors to get their teeth into currently, with even company news thin on the ground. There will be a World Bank/IMF summit soon in Washington which will doubtless give analysts food for thought.
Part of the reason for the domestic market’s recent rise has been a weakening sterling. This owes as much to a resurgence in demand for the dollar as to continuing worries over our future economic performance, though worse than expected construction industry PMIs (Purchasing Managers’ Indices) and minutes from the Bank of England’s committee that sets interest rates warning of likely economic disruption over Brexit did not help.
The pound has slipped against the euro despite the European single currency suffering as a consequence of the unrest in Catalonia. Indeed, while the unofficial independence referendum in that part of Spain failed to deliver a sufficiently clear signal to Madrid, it did serve as a reminder that any progression in the European Union towards further integration and the creation of a super state is likely to be met with opposition from nationalist interests.
Meanwhile, the collapse of the Monarch airline, admittedly not unexpected, does remind us that uncertainties remain despite recent investor enthusiasm. Privately owned, it should have little impact on market sentiment, though the many hundreds and thousands of people booked to fly with Monarch will be mightily concerned and considerably inconvenienced. Coming on the back of the Ryanair debacle, it did show that some business areas can be fragile indeed. It could prove to be an interesting autumn.
