“Taking the UK on its own, the weakness in sterling has pushed the FTSE-100 to new highs based on the currency translation and perhaps a perception that the immediate impact of Brexit is not going to be as bad as feared,” Stephens continued. “However, we now seem to have moved into a negative correlation situation. As the value of sterling weakens, the higher the FTSE-100 goes!”
Something else that could be a leading indicator of a UK equities sell-off is the recent pulling of some planned IPOs. Partly government-owned Lloyds and health club chain Pure Gym both backed away from transactions last week. That suggests investor nervousness about valuations is building, not yet to the point where existing holdings are heavily sold, but enough to dampen demand for newly-minted shares.
