MAJOR BREXIT U-TURN: Pro-Remainers JP Morgan NOW forecasts FTSE 100 will outstrip rivals
IT was one of the harbingers of post-Brexit economic doom – but now JP Morgan has admitted UK shares will prosper after the EU referendum.
The banking giant is forecasting that the FTSE 100 will outstrip other stock markets, especially in Europe.
Although the London stock exchange saw £120billion wiped off its value as it plunged eight per cent the day after the referendum, losses were recovered within the week.
Now the market is nudging its all-time high of 7089.77, the level reached in April 2015.
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Rising commodity prices, crashing bond yields and an export boom have made the UK attractive to global investors, according to the bank’s equity strategist Mislav Matejka.
In a research note, he said British equities were “bullish” and set to “outperform” those of other EU countries.
“We are not suggesting Brexit negotiations will be all smooth sailing. Still, if political uncertainty spikes again, our view remains that continental equities stand to lose more than UK ones,” he wrote.
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The fall in the value of the pound was another spur. He added: “This is a big positive for UK equities, as they derive most of their profits from abroad. Seventy-two per cent of FTSE 100 revenues are generated outside the UK.”
Earnings per share were “outright positive” for the first time in four years, he said.
This is in stark contrast to previous warnings from JP Morgan boss Jamie Dimon, who said Brexit could cost up to 4,000 UK jobs at the bank.
The change of view comes after a week of positive economic news for post-Brexit Britain, confounding Remainers’ predictions.
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The UK jobless total fell by 52,000 to an eight-year low of 1.64 million in the three months to the end of June, despite fears that companies would stop hiring.
Online retailer Amazon announced plans to open a warehouse in Tilbury, Essex, next year, creating 1,500 jobs, on top of 500 already created in Doncaster, South Yorkshire.
Supermarket chain Lidl also revealed plans to open a warehouse near Glasgow.
An Ipsos Mori poll also found that the public had become more upbeat about the economy.
Month-on-month figures from the Office for National Statistics showed retail sales rose 1.4 per cent in July, smashing the meagre 0.2 per cent growth predicted by economists.
In addition, the annual rate of house-price inflation climbed by 8.7 per cent in the year to June, up from 8.5 per cent in May, despite warnings the market would slow.
Lloyds Bank announced investor confidence last week was at its highest this year. It grew by 8.13 per cent after the initial shock of the vote.
Equities and property were seen as the strongest performers despite both initially being ravaged by the referendum result.
The FTSE 100 Index is showing a year-on-year rise of 11 per cent and is at its highest since June 2015.
