Volatility on the cards for investors in the UK

Volatility on the cards for investors in the UK

A correction could be on the cards for UK investors currently enjoying the bull market run, John Greenwood has warned.

The chief economist for Invesco Perpetual said: “For every area of strength in the recovery there appears to be an associated element of weakness or vulnerability.”

He said the moderation of growth in the UK economy was occuring at at time when the economy was “still some distance from its full potential”, which suggested that it was still vulnerable.

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Over the past six years since March 2009, the FTSE 100 has risen nearly 131 per cent, but this has posed a question for investors of where the market will end, with the prospect of corrections.

Merav Brenner, the account manager for options software technology firm ORE, warned that volatility could rise in the run-up to the General Election and in the days immediately afterwards, which will have a knock-on effect on the value of sterling.

Mr Brenner said: “The currency markets are anticipating a huge sterling volatility spike in the immediate aftermath of the election vote.

“Trying to predict this election is one thing, but putting your money on it is another.”

Adviser view

Guy Stephens, director of Bristol-based Rowan Dartington Signature, said: “It may come as somewhat of a surprise that UK equity markets have been so sanguine, bearing in mind the current uncertainty generated by the UK political scene.

“While there is still time for the uncertainty to unsettle the UK market, and raising a little cash is no bad thing, we do not see a threat to the UK’s long-term recovery.”