Latest UK economic and market outlook.
The passing of the $900bn Covid-19 aid bill days before Christmas provided a final fillip to equity markets into year-end, and a reminder that global fiscal and monetary policy should remain conducive to further equity market appreciation. For the UK market in particular, we believe that the Brexit resolution is an important milestone that removes uncertainty and should result in a cessation of the buyers’ strike that was taking place, with net inflows expected into the market over the coming months.
Whilst Europe and the US suffered with a resurgence of Covid-19 cases and deaths over the holiday period, multiple Covid-19 vaccines have now been approved in many jurisdictions, which should ultimately curtail the spread of the virus and allow a cyclical rebound to take place. Consequently, the portfolio retains a cyclical tilt. We continue to like recovery names in the travel & leisure space as well as infrastructure and construction plays. Meanwhile, we maintain exposure to a wide variety of environmental themes such as hydrogen, carbon capture, energy storage, smart metering, sustainable packaging, waste and recycling.
Finally, with ballooning deficits and interest rates pegged to the floor in the US, we expect further weakness in the dollar and associated strength in global commodity prices, particularly as many metals such as copper will be in increasing demand as they help to facilitate the green transition. We therefore retain significant exposure to mining, where valuations continue to look very cheap and balance sheets very strong.
Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).