• The FTSE 100 was one of the worst-performing major indexes in Europe in September. However, UK investment bank, Barclays, in a research note, said stocks in the UK region were cheap and under owned. 
  • The UK market is “foreign exchange sensitive” and with the GBP likely to be choppier due to Brexit uncertainty, Barclays predicts the FTSE 100 will improve, which could create opportunities for investors.
  • Barclays outlines seven UK stock picks with catalysts in the fourth quarter and two stocks to sell.
  • “Our seven OW-rated stocks have an average upside to our PT of 26%; whilst our two UW-rated stocks have an average downside to our PT of -27%,” said Barclays’ equity analyst, Richard Taylor, in the note.
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The FTSE 100, the UK stock index that tracks the biggest 100 companies on the London Stock Exchange, was one of the worst-performing major indexes in Europe in September.

UK assets were hit hard due to a surge in COVID-19 cases in Britain, along with tighter restrictions on movement and renewed concerns over Brexit. 

FTSE 100 index on October 9

FTSE 100 index on October 9

Business Insider Markets


However Barclays, the British investment bank, still sees opportunities within the UK.

Until last month, the bank had an underweight rating on the UK but this has now switched to medium-weight.

In an October 8 research note, the bank acknowledged that the uncertainty of Brexit combined with “waning” fiscal support could leave the UK with slower recovery. However, with the UK being a foreign exchange sensitive market, the pound is likely to be choppier due to uncertainty around Brexit, which could help with the FTSE 100’s poor performance and create opportunities for investors.

“The [UK] region is under owned, cheap

By Herbert Lash

NEW YORK, Oct 1 (Reuters)Renewed U.S. stimulus hopes lifted gold prices and global equity markets on Thursday, but relief talks faltered while an all-day outage on Tokyo’s Nikkei and a Brexit legal dispute provided a bumpy start to a likely volatile fourth quarter.

The dollar slipped against major currencies as hopes for a new round of fiscal stimulus from Washington cheered investors who sought higher-yielding but riskier currencies.

Stocks on Wall Street and in Europe rose as investors bet on more stimulus after data showing the number of Americans filing new claims for jobless benefits fell last week. But claims were still at recession levels, while personal income dropped in August, underscoring the need for further government stimulus. L1N2GR1VQ

The Dow industrials and the S&P 500 pared some gains after U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin remained far from agreement on COVID-19 relief, differing over aid to state and local governments.

The economy is recovering well but large U.S. corporations have announced layoffs, so stimulus is needed to support income and people’s lives, said Esty Dwek, head of global market strategy for Natixis Investment Managers, in Geneva.

Walt Disney Co DIS.N, Goldman Sachs Group Inc GS.N and the airline industry, among others announced job cuts this week.

“The more you can support or give job confidence, the better it will be,” Dwek said. “If we don’t get stimulus, it’s going to be extra bumpy.”

The number of Americans filing for jobless benefits fell to 837,000 in the week ended Sept. 26, but claims could rise again over the next few weeks as businesses cut more jobs to ride out the recession.

MSCI’s benchmark for global equity markets .MIWD00000PUS rose 0.55% to 568.28, while the broad FTSEurofirst 300