As we enter the month of May, investors are bracing themselves for the possibility of a stock market crash. The age-old adage “Sell in May and go away” is once again making the rounds, as historical data suggests that this month tends to bring about underperformance in the stock market.
Despite the looming fears of a crash, British stocks are currently on the rise. The FTSE 100 index has recently hit record highs, while the FTSE 250 is also experiencing an uptrend. This positive momentum has some investors questioning whether a crash is truly imminent.
One key factor to watch closely is interest rates. Lower rates typically benefit stocks as borrowing costs decrease. The upcoming monetary policy decision from the Bank of England will provide important insights into the future direction of interest rates. The bond market is sending mixed signals, with some indicators pointing towards a more hawkish stance on inflation.
The health of the UK economy is another risk factor to consider. While signs of recovery are present, such as a slight increase in GDP growth, the country is still facing challenges. Bankruptcies are on the rise, and the OECD predicts that the UK will be the worst-performing G7 economy in 2025.
For investors looking to protect themselves from a potential crash, defensive stocks like British American Tobacco could be a wise choice. With a low P/E ratio and a strong dividend yield, the company offers recession-resistant qualities that could help weather a market downturn.
While the future of the stock market remains uncertain, staying informed and diversifying one’s portfolio are key strategies for navigating potential risks. As we head into May, investors will be closely monitoring market trends and economic indicators to make informed decisions about their investments.
