While most facets of the economy have felt the largely negative effects of Brexit, not all of them have been affected equally. Stock markets globally, for instance, have felt a bigger pinch, thanks to the cloud of uncertainty that continues to bite while the world waits for the aftermath of Britain and the EU’s messy divorce, whose official outcome will be known after March 29.
That is because companies that are listed in the exchanges and have a lot of their trades affected by uncertainty usually feel the immediate effect of stocks tumbling while some other tradable instruments would have their prices rising.
With the possibility of a hard Brexit increasingly becoming a reality, it is wise to understand early on that the Brexit vote had repercussions that went beyond Britain’s own clamor for sovereignty. For investors, Britain’s potential loss of close corporation with the rest of the single EU market is also a huge cause for alarm.
Focus Turns To Gold And The Tech Sector
For centuries, gold has proven to be a vital holding to hedge against most economic or political uncertainty. The prevailing case at the moment is a textbook example of the same. At the moment, gold is trading at 7-month highs, showing that there are many institutional and individual investors rushing to purchase the commodity as a safe haven as we get closer to March. The situation is further complicated by political tensions within the Trump White House that seem to hit new levels every other day, all while the European block does its own firefighting regarding the UK’s exit from the European Union.
At the end of January, gold traded at $1300 an ounce (spot) and $1301 for the US gold future. This has shown a gain of 12 percent compared to the highest price averaged in August 2018. The big money has continued to shift away from stocks and other non-commodity trading instruments available for investment.
Discounted Tech Stocks Can Be A Good Pick In The Short Term
Even so, the stock markets around the globe have still shown plenty of volatility heading into the new month of February. A lot of the interest has still been in the technology sector, especially since some of these tech stocks have excellent longer-term outlooks despite the glaring price stagnancy. Microsoft (NASDAQ: NASDAQ:MSFT) on Tuesday fell to $102.94 down 2% while chip manufacturer NVIDIA (NASDAQ:NVDA) fell to $131.60 down 4.64 but opened green on Wednesday, January 30.
Investors would want to take advantage of the confusion in the market to chance on these ‘wide-moat’ stocks that make a combination of new innovations and more traditionally-established business models. For example, there are tech companies that provide solutions to insurance providers, some airlines, mining industry and motoring.
If a certain company stock has a remarkable interest in more than one industry, it is more likely to survive sudden bearish pressure in the global markets compared to others that focus on only one business model. Most new investments, for instance, that is aimed at Insurance technology and AI funding has mostly centered the focus in underwriting (48%), claims management (33%) and product development (24%) of the investment.
As we go deeper into February, we can still expect some more political and economic uncertainty from the Trump White House, thanks to the impending US-China trade deal and the sluggish growth of the Eurozone economy, even as the British parliament debates newer amendments to the Brexit deal.