Richard Stroud
Richard Stroud
United Kingdom
3mo
Edited
COPIERS AND FOLLOWERS UPDATE Hi everyone, another update from me as markets continue their high levels of volatility on the back of the Iranian conflict, now seemingly set to last longer than everyone had originally hoped. The Straight of Hormuz is the crux of the problems as far as the markets are concerned, and while nobody would wish to trivialise what is happening to civilian populations in the Middle East, investors are none the less focussed on the rise in oil and gas prices and the effect of these increases on western economies. Attacks on oil and gas infrastructure across the Gulf states have sent oil, but in particular, gas prices surging. With no sign of any let up in hostilities, concerns are that sustained higher energy prices will cause another spike in inflation, which consequently has been affecting stocks, but bonds in particular. The UK in particular has seen sharp falls in Gilt prices, as due to its high demand for energy imports any price rise in energy is felt more keenly here. European nations have also seen bonds and stocks drop on these concerns, with even the U.S, which is much more energy independent, suffering in the markets. We have seen today very high volatility in stock prices, as the start of the day looked to be down a fair bit, only for Trump to post on social media that planned strikes on Iranian energy plants and infrastructure was being halted for 5 days due to “Very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East”. Stocks have now had a bit of a rally, although Iranian state media said there were no direct talks between the two countries, so I think this will need a bit more time to play out before investors can take this latest development too seriously. In the portfolio, we have taken good profits in our UK FTSE 100 and 250 positions as well as, for the moment, selling our UK gilt position. If the war does end soon, this will undoubtedly be a good thing for markets, however the effects of high energy prices and damaged oil and gas ports and depots in the Middle East will almost certainly have a lasting effect on prices in Europe, the U.S and across the world. The consensus now is for central banks, rather than to make one or two rate cuts this year, to make several rate hikes in 2026 to try to counter this looming rise in inflation that appears to be round the corner. Certainly the decision to sell our U.K positions appear to have been a good move and once I have a more clear picture where rates and inflation are going, I will certainly be dipping the portfolio’s toes back into this part of the market again. There are certainly some more attractive prices coming into view, and soon I will be making some small changes and additions to the portfolio, so please keep posted for more updates. In the meantime, the best thing as always in times of volatility is to sit back and let events unfold, with some good opportunities to take advantage of beckoning in the not too distant future. With best wishes, Richard.
Not investment advice. The author may have financial interests in the mentioned instruments.
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