Footsie's nasty American import

Article Abstract:

The United Kingdom FTSE 100 index has tended to rise with the value of pound sterling, and drop as the pound has dropped. A strong pound sterling is likely to hit profits, but there has been a correlation between the Dow Jones index and pound sterling, and between the FTSE 100 and the Dow Jones. Fear of recession could lead to a drop in US stock prices which could lead to a drop in US interest rates and in the value of the US dollar. A drop in stock prices could also lead to a drop in demand for assets denominated in dollars, and this could lead to a drop in the dollar's value.

Securities and Commodity Exchanges, Exchange Rates, Security and commodity exchanges, Securities Exchanges, Economic aspects, Prices and rates, Stock-exchange, Stock exchanges, Exchanges, Pound (United Kingdom), Dollar (United States)

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Why staying at home makes sense

Article Abstract:

Investors can reduce risk from stock markets by investing in other assets, such as government securities. Government securities tend to perform better than equities in a recession. There is also a risk of investors' earning power being lost in recessions, and returns from government securities do not show as high a correlation with returns from earnings as do returns from equities. There is also a case for holding foreign stocks since returns from these are less linked to returns on earning power than are returns on domestic stocks.

Portfolio Management, Analysis, Financial markets

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