In the wake of David Davis’ and Boris Johnson’s resignations from cabinet yesterday, investors are being advised not to panic despite the increase in uncertainty.
After Mr Davis’ resignation the pound strengthened as it seemed that a softer Brexit was more likely. However, these increases were reversed following Mr Johnson’s resignation as it made the Prime Minister’s position seem weaker. The FTSE 100 was up one percent yesterday as the market reacted positively to sterling’s fall.
Helal Miah, investment research analyst at The Share Centre, commented on the market’s reaction to the resignations: “The events of the last 24 hours have greatly increased the fears for businesses and investors which justifies sterling’s fall. The stock market however, has risen, with the FTSE 100 rising by one percent so far on the day. This gain is more likely a reaction to sterling’s fall than investors taking a view that today’s events are positive for shares following the same trend we have seen since the initial referendum, as a weaker sterling makes UK assets cheaper for international investors.
“For the UK private investor, this obviously increases uncertainty, but it’s something we have already become used to over the last two years. During this period, investment returns have not been the disaster that some had feared as a result of Brexit. As it stands, we do not think that UK investors should be panicking and therefore there is no need to make wholesale changes to their portfolio.”
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