- FTSE100 is flat but mid and small caps are in the red
- Short term concerns over political uncertainty, including the Brexit situation, but longer term many are talking up the value of the UK market
The UK is a ‘buy’ is fast becoming the consensus view. As per Goldman Sachs yesterday, chiming views expressed here in recent weeks, UK equities are due to catch up. Analysts at the vampire squid expect a free trade deal with the EU and “substantial room” for a strong economic rebound in 2021, as activity remains depressed and the UK is well positioned for vaccine distribution. Both should support GBP and UK domestic stocks, whilst they do not see a move up in sterling on a Brexit breakthrough as a significant barrier to FTSE 100 performance. Back to the strong pound = strong UK equities correlation of old. Meanwhile, the FTSE 100 has an expected 2021 dividend yield of 4 per cent, making it the most attractive among developed market stock indices.
Read what our resident economic Chris Dillow thinks on the 'value cycle'.