It is an incredibly important week ahead for markets and there are numerous macro and political factors which could easily upset investors.
Russ Mould, investment director at AJ Bell, said: “The US Federal Reserve is expected to start tapering its bond purchases and the Bank of England could press the button on the first of many interest rate hikes expected over the next 12 months.
“Investors have been given plenty of notice that the Fed will start to ease its monetary stimulus measures, but the market can be easily shocked. The Bank of England might wait another month to push up UK rates, but again it shouldn’t be a surprise to see action before the end of 2021.
“Oil producers’ cartel OPEC+ has its next meeting to determine output rates which could have a major influence over the commodity price. We’ve also got a spat between the UK and France regarding fishing licenses which has created new storm clouds.
“While the backdrop is somewhat fragile, investors don’t seem nervous as the new trading week has kicked off with a bang. Markets across Europe and much of Asia have pressed ahead, including a 2.6% rise in the Nikkei 225 following Japan’s general election result which saw Fumio Kishida declare victory for his ruling Liberal Democratic Party.
“In the UK, the FTSE 100 was up 0.5% to 7,270, with pharmaceuticals and some of the banks leading the index.”