How the Scottish Referendum Affected the Stock Market

A review of how the Scottish Referendum affected the stock market, Apple report record sales of iPhone 6, and Alibaba post IPO record by Jonny Smith

After a summer break, this weeks article will assess the effect of the Scottish referendum on the strength of the currency and stock market. There will also be an assessment of Apple following the release of the new iPhone 6 and further American news from Bank of America, Alibaba, and Shetland based Faroe Petroleum.

The Scottish referendum has reduced the dollar to pound conversion rate and caused a FTSE decline prior to the second opinion poll on September 10th . There was uncertainty in the American markets about what would happen with ‘the Great British Breakoff’ and the chaos was evident, the FTSE dropped by half a percent and the exchange rate of the pound to the dollar is at its lowest rate for the previous four months, with a high of $1.71 per pound and panic began in early September causing the dollar to slide down by ten cents to $1.61. The vote had a significant impact on the stock market due to the uncertainty over what would happen if Scotland gained independence and a yes vote would have caused significant turbulence. So Downing Street, Wall Street and the city of London breathed a huge sigh of relief on Friday morning when the Scottish people decided to stay in the United Kingdom, but should Scotland have won independence, it would not have bared thinking about.

There are signs the America economy is making great strides with the Bank of America producing some good results on Monday morning in New York. The share price rose 0.5 per cent after announcing gross profit margins of 86 per cent compared to the same time last year, and numerous American analysts suggest the stock could grow 50 per cent by 2017 compared to its current value. The Bank of America has been plagued by heavy litigation costs which have cost them $30 million. But the movement of bad investments and radical expenses cuts have seen the company turn things around. Reports also suggest the company have mortgages that are 95 per cent secure, which has not been seen on the American market since the recession and shows good long-term investments are being made to help rebuild consumer trust. Here the Bank of America looks a certain long-term investment for the foreseeable future due to its predicted growth and the fact they’re addressing their previous pitfalls in order to have a sustainable future.

bank of america

Last week saw Apple release the new eagerly anticipated iPhone 6 to stores worldwide following the keynote on 10th September. Numerous estimations suggest Apple sold a record of more than ten million new iPhones during its launch weekend. The share price has made its year peak of $103.3 following their keynote news about the new iPhone, but it has floated around the $101 mark for the past week so the signs are there this could be sustainable. For me the longevity of the share has been good since I advised readers to buy Apple in October last year their share price has risen by 44 per cent, which is certainly better growth than you would find at the bank. There is still longevity left yet with a new iPad, which is expected to be released over the course of next year, but we won’t know how successful the iphone 6 has been until the year ending results are released in late October 2014.


Thursday sees oil company Faroe Petroleum release their six-month interim result and on Monday they sold a ten per cent stake in the Glenviet gas field to Total for approximately £10 million. I have previously covered Faroe Petroleum back in April and since then the share price has declined by 19p from 128.25p to 109.25p, but this news was amidst their positive 2013 year ending results. The shares will be classed as cheap currently with the potential to improve, and market analysts from Panmure Gordon are advising investors to buy the stock. Even though the company is heavily influenced by the ever-changing price of oil don’t be put off as they are expected to expand their oil fields next year after making extra funds from their assets.


In other news last week saw the emergence of Alibaba, a Chinese e-commerce company, onto the US stock market. The pre-buy price of $68 per share was snapped up, as the share rose to $100 in the first few hours of trading before eventually leveling out to around $85. This was the biggest IPO growth on a first day in New York stock exchange history. Keep an eye out here, as Alibaba are the leading e-commerce Chinese company and their share price has the potential to increase over the long-term once the company’s popularity increases across America.

Overall, the Bank of America seems a good long-term investment with predicted forecasts come to fruition, and Apple, who are expected to announce record profits in October following the success of the iPhone6 last weekend, is another solid long term investment. Faroe Petroleum is currently lower than previously reported in March by 19p and there is scope for the company to reach those heights again sometime this year, but there is always risk associated with oil companies in terms of the fluctuating marketplace. Finally, Alibaba made an impressive statement Friday with a rapid rise in the IPO, which made very good yields for investors during their first day, and I would advise we all keep an eye on these over the long-term.

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