“Notwithstanding the wildly exaggerated news stories, very little actually happened,” begins the second paragraph of a commentary recently published on the website of investment firm Kingwest & Company.
The piece, titled The key to weathering market uncertainty: Look through the noise
, points out how predictions of a major financial crisis in the wake of Brexit have been far off the mark.
“Most stock markets have recovered. To the end of July, the S&P/TSX Index was up 3.2 percent since June 23, the day before the results of the vote were known. The S&P 500 Index was up 2.9 percent. The UK market was up 6.1 percent,” it reads.
While the statement concedes that things are not so good for the European continent, it points out that a relatively rosier picture is developing for North America.
“The important point to us in North America is that our dollar has not changed very much if you compare it to the countries where we trade the most,” it explains.
An interest rate hike announcement from the Fed is also forecast for December, on the basis that increasing wages and falling unemployment may inspire the US regulator to finally let go of its dovish stance.
“If the trend in [US] wage growth persists, it is quite probable that rates will rise in December. It would be unlikely to happen before then because the Fed has historically not interfered in the US election.”
The commentary acknowledges that there is lingering uncertainty, but maintains that since the uncertainties that could affect the market are now known, everything will proceed as it always has until an agreement is finalized.
“Businesses need to keep investing for the long term. Consumers need to keep spending within their means. The UK remains a member of the EU and companies continue to benefit from being able to trade within the free market. Workers and consumers continue to be afforded the same protections as before the vote. The most important thing now is to look through the noise,” it says.
Post-Brexit investors fear the unknown
In times of market volatility, stay the course, says Bridgehouse head