Changes to oil prices, wages and UK tax are three factors which could affect financial markets, according to an investment firm’s Senior Director.
Pam Beith, Head of the Tunbridge Wells office for Brooks Macdonald, stressed a need for caution in her 2018 predictions.
The company, which also has offices in London and Hampshire, has also released its financial outlook for this year.
Ms Beith noted 2017 was one of the ‘least volatile on record’.
She said: “Should the current low-inflation, low-growth backdrop persist, we would expect this to be positive for risk assets in aggregate.
“In particular, it should benefit sectors that can deliver secular above-trend growth, such as technology and healthcare. With equity markets hitting all-time highs, we have balanced portfolios to prepare them for the possibility of higher interest rates.
“To accomplish this, we have retained underweight positions in fixed interest assets and added holdings in financial equities, which can increase profits if rates rise faster than markets expect.”
Brooks Macdonald has made three resolutions for 2018, which Ms Beith said were necessary if a ‘goldilocks environment’ continued.
These are to: Ensure portfolios are balanced, invest thematically and research alternatives.
“We seek to make sure portfolios contain a blend of risks so you are not overly exposed to the path of the broader market,” continued Ms Beith.
“If the current goldilocks environment continues, growth sectors such as technology may outperform and if inflation returns then relatively cheap areas like financials should do well.
“Investing thematically rather than based on geography allows a more precise control of the risk and rewards in a portfolio.”