With inflation still running high and interest rates rising, remaining in cash can impact your wealth over time if you avoid equity markets altogether

UK markets outperform most major markets

The UK stock market rebounded from a tough March and outperformed developed market peers. As the market gyrated through April, top contributors were those which underperformed last month - banks, real estate and consumer staples companies. Headline inflation has declined but remains stubbornly elevated, not helped by a hot wage print causing yields to push higher intramonth. PMI’s are diverging with manufacturing falling into contractionary territory, while services are in expansion. Interest rates are expected to move higher, and Sterling has continued to strengthen through April from September lows, toward five-year averages.

Up 3.0% (UK All Share)

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When it comes to their constituents, some indi-ces do not always list one major driver of per-formance: currency.

UK MARKETS

Inflation remains stubbornly persistent

UK stocks declined through the month, with the events surrounding SVB in the US, as well as Credit Suisse in Switzerland, impacting financial services. Unsurprisingly the FTSE 350 Banks Index (-13.7%) led the decline alongside consumer-focused sectors. Manufacturing and services PMI’s have deteriorated, and growth expectations have lowered. Despite this, the Bank of England decided to increase the base rate 25 basis points, as inflation moderates but at a frustratingly slow pace. This provided a headwind to relative fixed income performance and equities, but a tailwind to sterling, most notably versus USD.

Down -3.4% (UK All Share)

When it comes to their constituents, some indi-ces do not always list one major driver of per-formance: currency.

Everyone is capable of reaching their financial goals—you just need a plan to get there. However, a shocking number of people either don’t have a plan at all or aren’t confident in their financial planning.

In their 2021 Financial Wellbeing Survey, the UK’s Money and Pensions Service found that one in three UK adults are worried about their financial situation. A whopping one in two (technically 45%) don’t feel confident in their day-to-day money management.

Fortunately, proper investment planning offers a simple solution that can restore confidence and put you on the path toward better financial health. In this post, we’ll break down our top five investment tips that everyone should know.

UK MARKETS

UK equities outperform their global counterparts but remain fragile

UK stocks outperformed their global market counterparts, driven by consumer staples and materials. As monetary policy efforts begin to take hold, the economy showed the initial signs of slowing, with GDP growth declining. House prices fell at their fastest rate in a decade. The Bank of England governor Andrew Bailey delivered a more dovish statement following another 50 bp hike early in the month. Despite some positive signals, the outlook remains mixed. While inflation remains at challengingly high levels, owing to prices of soft commodities and wage growth effects, PMI’s have improved but remained in contractionary territory, and consumer confidence has lifted.

Up 1.2% (UK All Share)

With more and more tech companies listing elsewhere, has the UK lost the investing race? Or is it simply the tortoise in this tale?

UK MARKETS

A strong start to the year for the markets bely a challenging economic environment Led by cyclical selections within consumer discretionary, construction and real estate, the UK equity market enjoyed a strong start to the year, outperforming broader developed market equities. December’s year-on-year inflation figures fell marginally, with energy and food prices easing. However, the country is still witnessing inflation well above long-term trend levels, with robust wage growth a contributing factor. PMI’s remain in negative territory and the market is pricing negative economic growth for 2023. Retail sales are declining and aggregate demand is beginning to slow. The Bank of England will have a difficult task raising borrowing rates against this increasingly recessionary backdrop. Up 4.4% (UK All Share)

UK MARKETS

Despite negative returns, the UK outperformed most developed markets in December. The UK declined but comfortably outperformed developed market peers in December. This performance was due, in some part, to index composition, with the FTSE comprised of a higher number of consumer staples and commodity-focused companies, which performed better. However, growth sensitive stocks languished, as PMI’s remained in negative territory but steadied, and yields rose. Inflation remains the key cause of concern, although there are signs that it is reaching a peak. The Bank of England raised interest rates 50 basis points higher, and it’s guidance remains hawkish going into the first quarter. Down -1.6% (UK All Share)

UK MARKETS - Political change leads to market stability and falling government yields. The UK opted for political change, trading Liz Truss and Kwasi Kwarteng for Rishi Sunak and Jeremy Hunt as Prime Minister and Chancellor, respectively. Equities responded positively to a more orthodox fiscal approach and greater political stability, while yields declined on UK government debt. From a sector standpoint, consumer related sub-sectors, such as travel/leisure and tobacco, performed best. The Bank of England is expected to raise rates at the November meeting. However, the consensus for future hikes has softened, with the latest PMI data signalling the country is moving into contractionary territory already. Up 3.0% (UK All Share)

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Political change leads to market stability and falling government yields.

The UK opted for political change, trading Liz Truss and Kwasi Kwarteng for Rishi Sunak and Jeremy Hunt as Prime Minister and Chancellor, respectively. Equities responded positively to a more orthodox fiscal approach and greater political stability, while yields declined on UK government debt. From a sector standpoint, consumer-related sub-sectors, such as travel/leisure and tobacco, performed best. The Bank of England is expected to raise rates at the November meeting. However, the consensus for future hikes has softened, with the latest PMI data signalling that the country is moving into contractionary territory already. Up 3.0% (UK All Share)

Do you feel like the news is all doom and gloom? Ever rising energy prices and food bills. Inflation. Increased mortgage costs. Strikes. Your travel plans out of kilter, either from a delay in receiving your passport, or trying to locate your lost luggage?

While global equity markets have struggled over the past year, exposure to global natural resources has powered investor returns.

As a business, investors and consumers increasingly embrace digital solutions, the diversity of investable asset types is set to increase significantly.