Posted in:

Market update: Interest rates, FAANG, Brexit

We’ve seen volatility in the tech sector in recent weeks and it’s particularly relevant given how much tech has driven the US equity market over the last few years.

The turbulence has largely been driven by Facebook, who missed earnings forecasts and began to talk down some of the expectations held by the market.

This doesn’t make Facebook a bad business, the social media giant is highly profitable and fast growing.

Elsewhere in the tech sector, Apple’s results met expectations, helping it become the first US company to be valued $1 trillion.

Apple went through a similar process to Facebook a few years ago when iPhone sales started to slow. In a quarter that was deemed to be a pretty good one, unit volumes grew by only 1% in its core business.

There have been winners and losers in the tech market, but overall in tech and the broader market, earnings and sales have been good, which should underpin valuations going forward.

Read why Richard Flax doesn’t think this is start of the end for the tech sector.

How is the market reacting to Brexit uncertainty?

It’s been a busy month for UK politics and Brexit negotiations seem to be coming to a head. The outcome is still very uncertain and that’s had a negative impact on a range of UK asset, notably sterling and property.

Moneyfarm Portfolios are globally diversified, so don’t have a large exposure to the UK.

Nonetheless, we’ll continue to monitor the situation and will make any changes when there is more clarity.

Interest rate rise

The Bank of England increased rates by 25 basis points to 0.75% this week. It was a move that was expected by the markets, despite the case for hiking rates getting weaker, not stronger.

Although sterling initially strengthened on the news, it quickly sold off quite sharply, which suggests the market is questioning the wisdom behind the Bank of England’s move.

Read our further analysis on the rate rise from Richard Flax.

Did you find this content interesting?

You already voted!