Anthony Willis, investment manager in the BMO Global Asset Management multi-manager team, pointed out markets have had a strong year so far and therefore a period of consolidation is to be expected at some point.
Mr Willis said: “There is a lot of good news priced into equities whilst bond markets continue to price in a somewhat bleaker outlook, though government bonds clearly remain supported by central bank policies.
“Scope remains for markets to grind higher, and we should remember the economic and corporate backdrop continues to be supportive. However, we are in no rush to increase our market exposure across the portfolios.
“The Brexit negotiations are scheduled to start in 11 days; it will be an interesting day in Westminster.
“Our view in the short term remains to stay underweight the UK, though we remain cognisant that the changing shape of politics may have significant consequences for policy on Brexit, which in turn will impact the economic outlook.
“Our portfolios have been underweight the UK for some time and the extension to the already extended period of political uncertainty certainly does make us feel more positive on the economic outlook.
“Any softening of the Conservative line on Brexit would be a positive but we remain concerned that political uncertainty will further damage what appears to be a slowing economy.”
You have been warned.
emma.hughes@ft.com
