Volatility Continues for Investors

UK investors had to endure further volatility in share prices during September. Anxiety over China’s economic outlook and speculation over whether US interest rates could rise affected sentiment, while concerns over the impact of falling commodity prices continued to weigh on the UK mining sector. Having reached an all-time high of 7,103.98 on 27 April this year, the FTSE 100 index fell as low as 5,909.24 points in September – a drop of almost 17% from its peak. Over the month as a whole, the FTSE 100 fell 3%, while the FTSE 250 index declined 2.5% and the FTSE SmallCap index dropped 2.4%.

Average earnings (excluding bonuses) rose by 2.9% during the three months to July, posting their most rapid rate of growth since January 2009. High-street retailer Next warned, however, that the government’s National Living Wage – which, from April 2016, will be set at £7.20 per hour for those aged over 25 – is likely to force up prices in the sector. Sports retailer JD Sports Fashion also sounded a note of caution over the initiative, warning its implementation might have a negative effect on earnings. For its part, hospitality group Whitbread indicated it would have to implement price increases and “efficiency savings” as a result of the National Living Wage. Elsewhere, the British Chambers of Commerce suggested: “Job creation may be impacted by the large increases in the minimum wage.”

If you are concerned by stock market volatility in your pension plan or investment portfolio please contact us on 0113 436 0110 or email sgroves@intergralfp.co.uk to discuss your portfolio.