May Market Bulletin
Posted by AndrewEarles on Friday 5th of May 2017.
April was another significant month for global politics. Following last month’s triggering of Article 50, Theresa May surprised everybody by announcing a general election on 8 June. The French went to the polls for their Presidential Election and for the first time first time since the founding of the Fifth Republic in 1958, neither of the two main parties will be represented in the second round. This is now a straight choice between the independent centrist, Emmanuel Macron and the far-Right Front National leader, Marine Le Pen.
If this wasn’t enough, in the United States, President Trump unveiled the most significant tax reforms since 1986.
So, how did global stockmarkets and currencies respond?
The FTSE 100 ended April at 7,203.94, which was 1.6% lower than the March closing figure of 7,322.92. During the month, there were some significant daily movements with the FTSE 100 closing down 2.5% on 18 April, while increasing by 2.1% on 24 April.
Across the pond, the Dow Jones Industrial Average closed the month at 20,940.51, which was 1.3% higher.
In terms of £ Sterling, it ended the month at 1.2932 US Dollars, which was 3.0% higher than the end of March. This was Sterling’s highest level in more than six months an was primarily driven by the Prime Minister’s surprise decision to call the snap general election in June, to secure political unity to support her Brexit plan.
Against the Euro, £ Sterling strengthened by 0.9% during April, with £1 now buying 1.1857 Euros.
The Bank of England maintained the base rate at 0.25% again, and while inflation, as measured by the Consumer Prices Index (CPI), was unchanged at 2.3% in March 2017, the long term impact on long-suffering bank and building society savers remains who are losing money in real terms when you consider the rate of savings interest compared to the rate of inflation.
And it appears that National Savings and Investments is not a viable option for these savers. The new Guaranteed Growth Bond, which offers the highest interest rate on the market of 2.2% a year over 3 years is restricted to online applications and a maximum amount of £3,000. This headline interest rate is in contrast to other National Savings and Investment products, where rates have been cut from 1 May 2017. The Direct ISA rate falls from 1% to 0.75% as does the interest on the Income Bond. The Direct Saver falls from 0.8% to 0.7%. Only Children’s Bonds are exempt from the rate cut, remaining at 2%. Even the interest paid on Premium Bonds will fall from 1.25% to 1.15%.
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