THE FTSE 100 share index hit a 14-year high last week, despite geopolitical tensions in the Ukraine and the Middle-East as global central bank policies pushed equity prices to levels not seen since the dotcom bubble.

With its high proportion of international companies’ shares, the FTSE 100’s movements are largely unrelated to the performance of the UK economy.

So far this year, the FTSE has risen two per cent compared with gains of between three per cent and eight per cent for US, European, Asian and Emerging market benchmark indices.

The FTSE has lagged because of the strength of sterling, which has caused its constituent companies’ earnings to fall short of expectations.

Underperformance is expected to continue ahead of the Scottish independence referendum and next year’s General Election.

North-East businesses are worried the result will be indecisive, hitting the region’s economy as politicians offer sweeteners to the Scots to bolster support for the union.

There are huge threats, whichever way it goes; anything that damages Scotland’s economy could harm the North-East.

Despite the less positive stock market data, the UK has seen more net employment growth over the past four years than the rest of the EU.

This supports the statement that Britain’s economic downturn after the crisis was shorter and shallower than previously thought.

Growth has been revised higher in every year since 2008 which eliminates some of the recent concerns over weak productivity.

However, the new figures still show that Britain’s economy suffered an unusually deep recession and a historically slow recovery, but not nearly as bad as previously suggested.

Across the globe, equity markets rallied strongly in August having lost four per cent in the space of a couple of weeks in late July/early August.

The MSCI World index ended the month up two per cent with strong gains seen particularly in the US and Brazil.

Macro themes continued to drive Asian markets with the MSCI Asia Pacific index down 0.6 per cent for the month of August due to geopolitical tensions and concerns over domestic growth.

The north Asian markets of China, Hong Kong, Japan and Korea all fell while the ASEAN (Association of South East Asian Nations) markets, India and Taiwan, gained within the region.

After three years of falling growth, equity investors have been awaiting signs of an Indian rebound and it has finally arrived.

Asia’s third largest economy expanded nearly six per cent in the first quarter of this financial year, having already jumped by 28 per cent over the last six months.

The data pushed India’s benchmark Sensex Index to a new high, crossing the 27,000 mark. Gradual improvements in corporate profitability had sustained India’s bull run over recent months and first quarter earnings proved better than expected.

However, challenges still face the economy.

India introduced tough duties and quantitative restrictions on gold imports last year as part of a plan to reduce the country’s current account deficit following a currency crisis that saw a sharp drop in the value of the rupee.

While many thought the restrictions would be gradually removed as the deficit sharply fell over the course of this year, the country is suffering a renewed spate of gold smuggling as import restrictions continue to throttle official inflows of the precious metal.

Government spending cuts are also expected to help meet the fiscal deficit target.

On a more positive note, India’s stocks remain relatively inexpensive compared to other emerging markets.

Samantha Dolby is an investment manager at Brewin Dolphin and offers advice on a wide range of financial services to private clients, trusts, charities and pension funds. Past performance is not an indication of future performance. The value of any investment and any income can fall and you may get back less than you invested. No investment is suitable for all people and should you have any doubts you should consult an authorised financial adviser. The information contained in this article has been taken from public sources and is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd. No Director, representative or employee of Brewin Dolphin Ltd accepts liability for any direct or consequential loss arising from the use of this document or its contents.