The Events and Data Releases That Could Impact on Your Investments
While the world of financial investment is always complex and challenging, occasionally a myriad of factors of combine to create something of a watershed for traders. The existing economic climate provides a relevant case in point, especially as we reach the end of the previous fiscal year and the beginning of a new one.
This instantly sets investors thinking about new ways to optimise returns and minimise taxation in the year ahead, but it is important to note that the next 12 months are likely to prove more challenging than most. With several crucial events and data releases scheduled in the near-term future, the need to create a balanced and diverse portfolio has never been more pressing.
What are the key economic events and data releases that will impact on your investments?
With this in mind, let’s take a look at the upcoming economic events and data releases that should help to inform your short and long-term investment plans for the year ahead. These include: -
Britain’s potential departure from the EU
On the face of it, the UK is a thriving commercial hub that continues to benefit from nationwide regeneration and sustained growth. The recent budget brought far more sobering news and greater insight into the British economy, however, revealing that the nation was facing an economic slowdown and lowering growth forecasts from 2.4% to just 2% for 2016.
One central factor in this decline (and one that continues to impact on Europe too) is the uncertainty created by Britain’s increasingly tenuous relationship with the EU. With UK citizens set to vote on June 23rd in a referendum that will determine whether or not Britain remains as a member of the EU or not, the financial market and its investors are braced for a potentially seismic transition and short-term declines in the value of the pound and UK stocks.
This is certainly a date for investors to pencil, and while the fear of change is often more debilitating to financial market than change itself there will undoubtedly be a drive for risk-averse trades involving British currency and shares in the coming months.
The potential for rising interest rates
This is more commonplace event that impacts on investors, and one that usually brings predictable results in terms of behaviour and outcome. It has come to light amid the fragile economic recovery that has impacted on the world over the last 12 months, with both the U.S and British governments having discussed the prospect of increasing rates in two increments of 0.5% throughout 2016.
While the more recent global tumult and the decline of the Chinese economy may have set these plans back until the first quarter of 2017 at the very earliest, it is a consideration that will continue to loom over the financial markets. Such a move would trigger the widespread sell-off of high-risk stocks across the globe, as investors look to seek solace in high-yield, government-backed bonds and securities.
This could create high volumes and huge levels of volatility in the marketplace, so it is wise to follow regular market analysis to stay ahead of such trends. Diverse brokerage firms such as ETX Capital offer live news and analytical resources to help provide you with clear insight, and this could prove crucial if the leading government’s decide to hike interest rates this year.
Property market bubbles and changing tax levies
We have already touched on how the decline of the marginal UK’s economy has gone largely unnoticed in recent times, with factors such as pronounced property market growth offering an ample distraction. This growth has continued at a disproportionate rate to earnings, however, creating an unstable market and creating a huge imbalance between supply and demand.
While the government has looked to overcome this by applying more stringent tax levies and stamp duties on buy-to-let investors (in a bid to force more properties onto the market), the incredible volatility within the sector has begun to deter investors on a huge scale. With a bubble potentially forming, the onset of a domestic or global recession could create great swathes of negative equity could create a housing market collapse that reverberates around the world.
If this does happen, we could see a fall-out similar to that which followed the collapse of the sub-prime mortgage market in America in 2008, and this prospect is forcing investors either to commit their funds elsewhere or consider lower cost housing outside of prime areas.