While the Christmas break is traditionally an opportunity to wind down, considering the events of 2020 it is unsurprising that the investment markets continued to be as turbulent as ever in the last fortnight of the year.

Increasing numbers of Coronavirus infections and the impending Brexit deadline gave rise to continued pressure on the market as December drew to a close. As the days went by and Brexit talks remained at a stalemate, the volatility of the FTSE persisted – and the strain on the market was only heightened by the chaos at the British borders when the 48-hour ban on freight travelling from the UK to France was announced. With time running out for a Brexit agreement, analysts thought this turmoil at the border was a sign of things to come.

In the days leading up to Christmas, rumours began to circulate of a Brexit deal materialising on Christmas Eve. The anticipation of the announcement increased the FTSE 100 by 0.1%, but investors continued to wait for confirmation to emerge. During this time, the pound saw a gain against the Dollar and the Euro, demonstrating the optimism in the market. Similar optimism was also seen across Europe and markets began to rise.

When the Brexit deal was finally revealed on the afternoon of 24 December, the market was expected to rise sharply as the terms of the agreement appeared likely to prevent chaotic business disruptions. The deal states that there are to be no tariffs or quotas between the UK and EU on most goods, though new checks will be introduced at the borders. Other key features include the loss of automatic right of access to EU market for businesses offering services, and restrictions on travel for UK nationals, with a visa now required for stays longer than 90 out of 180 days. 

Although the markets did have a positive reaction to the Brexit agreement, with the FTSE 100 increasing 1.55% between Christmas Eve and the 29 December, the immediate response was likely to have been tempered by the worsening Coronavirus situation, with further lockdowns suspected to be imminent.

While it is still too early to draw any significant conclusion from the Brexit agreement now in place, we continue to believe that for the majority of clients, multi asset investing remains a sensible approach going forward.

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If you would like to discuss this further, please do not hesitate to get in touch with myself or a member of our Johnston Carmichael Wealth team.

Disclaimer: This newsletter is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action.

Figures refer to the past and past performance is not a reliable indicator of future results. You may not get back the full amount of your investment.