UK MARKETS

UK budget finally revealed

UK equities fell, with large-cap stocks outperforming small and mid-caps. The labour market remained tight, with the unemployment rate dropping to 4.0% and pay growth at 4.9% year-on-year in August. Inflation decreased significantly to 1.7%, while core inflation was at 3.2%. The UK budget revealed higher-than-expected borrowing and taxes, as Chancellor Rachel Reeves announced £70 billion in extra spending over five years, funded by £40 billion in tax increases and £32 billion in additional borrowing. She indicated a loosening of fiscal rules to permit this increased borrowing, which the Office for Budget Responsibility warned could hinder long-term growth.

Down -1.8% (UK All Share)

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UK MARKETS

Weaker on energy prices and budget uncertainty

UK mid-cap stocks outperformed a weak FTSE100, with value leading growth. Weaker energy prices, and a softer dollar, weighed on the major oil stocks, while disappointing drug trials sent AstraZeneca, the FTSE's largest stock, down 13%.  Economic data was mixed overall, with weaker business and consumer confidence somewhat offset by lower unemployment (4.1%) and positive GDP growth.  The pending initial Labour budget added a touch of uncertainty to UK markets.

Down -1.4% (UK All Share

Will India surpass China on the global stage?

UK MARKETS

Mixed results during a volatile month

UK stocks saw volatility in line with developed peers. Large caps carried the index return (FTSE 100), while mid and small cap constituents declined. From a sector standpoint, the best performers were in financial services (+6.4%) and industrials (+3.4%), while real estate stocks underperformed. The new UK government is set to announce a tough budget in the coming months, which may introduce further market uncertainty. Gilts were largely positive despite continued concerns over more persistent inflation and issuance. While on the currency front, sterling gained against the euro and dollar.

Down -0.3% (UK All Share)

Its the jobs market, stupid.

UK MARKETS

Positive economic momentum propelled marketing returns

UK equities outpaced global counterparts, with the FTSE All-Share index rising 3.1%. This growth is attributed to robust PMIs in the service sector for July, in addition to economic growth in the second quarter that surpassed expectations, both indicating a positive shift in economic momentum. Certain sectors within the FTSE All-Share, such as energy and consumer goods, have shown strong performance, contributing to the rise in the overall index. The general UK election did not cause any significant market fluctuations, as a Labour win was widely anticipated.

Up 3.1% (UK All Share)

Navigating Recent Volatility with a Steady Hand

UK MARKETS

Lagged global equity markets

The UK relatively lagged global equities, with the FTSE100 retreating from May’s all-time high. The index was weighed down by a weakness in banks and mining. The more economically sensitive FTSE250 fell even further, dropping -2.1 %. With global equity market leadership driven by tech, the UK has minimal exposure to this sector. The election campaign has had minimal effect on market performance, mainly as the expected results have been priced in. A modest upgrade in 1Q24 GDP and encouraging inflation numbers have raised expectations for an August rate cut.

Down -1.4% (UK All Share)

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UK MARKETS

Mid and small caps help to deliver steady gains overall

The FTSE 100 made steady gains, achieving a 1.6% gain (2.1% total return), with mid and small caps leading the charge. Meanwhile, the FTSE 250 delivered a 4.2% return, and Small Cap ex-IT outperformed, rising by 6.7%. Across the market, the FTSE 350 Construction & Materials Index (6.5%) and the FTSE 350 Aerospace & Defence Index (6.5%) delivered the strongest returns, while the FTSE 350 Beverages Index (-4.1%) and the FTSE 350 Oil & Gas Producers Index (-2.9%) underperformed.

Up 2.0% (UK All Share)

For UK stock markets, it might appear to be the best of times and the worst.

UK Markets

Outperform global peers

Thanks to index composition, notably due to the banking, mining, and oil sectors, UK equities outpaced global counterparts. Robust performances from NatWest and others buoyed stock prices. Corporate actions, such as BHP bid for Anglo American, fuelled a 21% surge in its shares. Strong oil prices further bolstered UK equities. Concurrently, UK business activity surged, hitting its swiftest pace in nearly a year, as evidenced by the Composite PMI climbing in April. However, escalating input costs, coupled with declining output prices, hint at dwindling demand, squeezing business margins.

Up 2.1% (UK All Share)

UK MARKETS

Catching up to developed market peers

UK equities broadly followed global trends, albeit with the recognition that they have trailed developed markets for a sustained period, most notably the US. A strong rally in commodities meant large index heavyweights, such as BP (+7.6%) and Shell (+6.8%), outperformed, while mining stocks also fared well owing to this tailwind. The market also saw a steady stream of corporate acquisition offers and activity (for example, Wincanton, DS Smith, Spirent) despite confirmation that the UK has been in a technical recession. Sterling appreciated versus major currency pairs, while Gilt yields declined on the back of better inflation data.

Up 4.2% (UK All Share)

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US Markets

Continue their upward trajectory

US equities moved higher through February, driven chiefly by gains in the Consumer Discretionary (+8.6%), Industrials (+7.0%), and Information Technology (+6.2%) sectors. Despite the recent cycle of interest rate hikes, the US economy continues to remain resilient and even above expectations in areas, almost expansionary territory, given the recent growth and PMI indicators. The ‘Magnificent Seven’ stocks are increasingly looking like the magnificent three (Nvidia, Meta and Amazon), with Q1 earnings exacerbating this trend. The dollar moved higher in the month, while fixed income has languished year-to-date, with investors now expecting that the Fed will not cut rates until later in the year.

Up 5.2% (US 500)

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