While the point is frequently and correctly made that the FTSE 100 is more of a world index than a UK one due to the prevalence of companies which draw revenues from all corners of the Earth, the much more domestic market facing FTSE 250 has also chugged along at a fair clip.
The 250 has rocketed up from just under 15,000 the day after the referendum to the 18,700 point. Even when compared to its pre-referendum high point of 17,330, the rise has been considerable.
The negative media coverage and bearish words from the likes of George Osborne and Mark Carney have been more than matched by the continued spending of the British consumer and robustness of the economic data being generated by the country.
The low level of the pound versus the dollar and euro has also helped, particularly companies which draw revenues from outside the UK.
On Friday, the latest set of significant numbers was released and they were typically punchy. Manufacturing data, construction data and the UK’s trade balance all improved to beat most forecasts during the final quarter of 2016.
A danger with this continued charmed life for the asset class however, is that the market becomes so accustomed to strong data coming from the UK that a serious miss-step would cause a shock that could prompt a big sell-off.
There are many things that could act as the trigger away from the data of course, with the most obvious candidate being a big fallout between the UK and EU negotiating teams once Article 50 has finally been triggered next month.
In terms of a potential data-based trigger for a sell-off though, chief UK economist at Bank of America Merrill Lynch Robert Wood is among those who see some reasons for concern hidden among all the good news.
According to Wood, something to watch closely is pay growth, which he notes ‘isn’t budging’ despite the healthy state of the economy. This could become particularly concerning if as is increasingly expected, inflation starts to kick-in more meaningfully.
