At 12.30pm on Wednesday, Theresa May addressed the nation, confirming that Article 50 of the Lisbon Treaty had been deployed and that there was “no turning back.”
The prime minister emphasised that she plans to “represent every person in the whole United Kingdom” while ironing out the terms of Britain’s split from the European Union.
It was a momentous day for the future of the UK and the European project, but it was not a momentous day for stock markets, which treated the triggering of Article 50 as a non-event.
The FTSE 100 pre-empted PM Theresa May’s address to the nation by dipping slightly but by the afternoon had fully recovered and was trading up 0.32% at 7,366.6, a five-day high.
The Euro Stoxx 55 was also in high spirits on the day, reaching the 3,473.7 mark, a feat it hasn’t achieved since August 2015.
Sterling also wobbled as the two-year countdown to the UK’s divorce from the EU kicked off, though, this was somewhat expected, given the currency’s sensitivity to any Brexit-related developments.
But analysts have made a case for the pound’s resilience over the short-term.
The challenge inevitably facing investors is what to do in this brave, new post-Brexit world, if anything?
As with the Brexit vote, the message from the investment industry after the triggering of Article 50 has been muddled.
Many firms, like UBS Wealth Management, are promoting a message of “caution not chaos.”
Then there are others like Kames Capital’s Stephen Jones who urges investors to strike while the iron is hot and refrain from “playing it too safe.”
On the surface, the forecast for UK equities post-Article 50 hasn’t changed drastically from the prognosis shortly after the Brexiteers emerged victorious in the EU referendum last June.
“In the stock market, sectors such as consumer discretionary, real estate (house builders) and utilities have been particularly sensitive, and are likely to remain so,” said Mark Whitehead, portfolio manager at Securities Trust Scotland.
“The first two are particularly vulnerable to any further squeeze to real incomes, while utilities’ margins have been hurt by the rising sterling bill of energy imports,” he explained.
