Analysts at Jefferies sounded a confident note on the outlook for London’s top-flight index, despite Chinese economic data recently losing “some” of their sparkle.
Other headwinds included the peak in the rate of change in money supply growth over the past few weeks and corporate earnings revisions around the world, which had “topped out” for the moment, they said.
But the UK’s health was evident in the pound, which had strengthened from 1.14 in March to 1.42 on the back of the faster vaccination rate in the country versus its peers.
Aggregate card spending and catering/hospitality jobs meanwhile were at or above their pre-pandemic levels.
Hence, said Jefferies: “The good news for UK equity investors is that with nominal GDP running at ~8% and 10-year gilt yields at ~0.825% – profits are not going to be a problem for the next 18 months.
“Moreover, UK equities should trounce gilt returns over the same period.”
