Active Capital – Current Finance Market Trends

Anyone investing in today’s U.K. market — or any other one around the world — should take care and make methodical decisions. And hold on tight. Active Capital is a trusted financial advisor that helps its clients navigate the stormy seas of the current moment.

“This is an interesting time in the markets, both globally and in the U.K.,” notes a Director at Active Capital. “And there’s that old Chinese curse that goes: ‘may you live in interesting times.’”

The first issue roiling markets is that old favourite that will not go away — Brexit. The United Kingdom’s still “potential” departure from the European Union is still the approaching storm to worry about.

Everything about the business ramifications of Brexit that can be said probably has been by now. A hard Brexit is expected to create severe ramifications — a softer one probably will be no picnic either.

This is especially true in the finance sector since large U.S. banks like J.P. Morgan, Merrill Lynch, and Goldman Sachs have based their European operations in London. Their offshoring to Dublin, Paris, and Frankfurt is a trend that has to be taken seriously. The fintech sector is also very wary of Brexit, due to the possibility of greater regulatory requirements for non-EU countries and the disappearance of EU incentive programs.

And the trade repercussions of leaving the common market for more traditional economic sectors — and everything it incorporates regarding tariffs, port backlogs, supply chains, and price rises — are still on the horizon.

“Obviously, there’s no good answer on Brexit,” states a Director at Active Capital. “It’s going to be a tricky time to navigate a U.K. investment portfolio.”

Even without Brexit, the forecast for the wider global economy has been downgraded. This is due to the other wild card facing the markets, the increasingly harsh trade war between the world’s two biggest economies.

The tariffs imposed by U.S. President Donald Trump and counter tariffs put into place by China are causing more and more waves to ripple through the world economy. This situation appears to be almost as hard to fathom — and solve — as Brexit.

In other words, there are two major “weather systems” in the market currently. Everything else is a secondary front.

And the fact that, thanks to Twitter, an American president can (and does) make statements with economic repercussions that have not been vetted by his economic team (or maybe by anyone at all) is certainly a trend. Trump’s unwillingness to follow established norms and instead comment directly about economic issues — even the management decisions of specific companies — can and will have profound impacts on day-to-day trading decisions.

One trend that would get more attention in other circumstances is the expansion of artificial intelligence. Not only are quantitative algorithms driving more financial trading activity, but the expansion of AI into all sectors of the economy is perhaps the most important current non-political market trend. Because of AI-augmented products (such as self-driving autos) and internal company management that is increasingly aided by machine learning, AI may be the next tech wave to sweep the markets in ways reminiscent to the expansion of the Internet in the 1990s.

Any number of other factors are worth noting, including the usual questions about oil prices and political instability in the Middle East, the effect of climate change on agricultural output, and further adaptation of green energy sources.

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