UK MARKETS

Inflation continues to impact sterling and UK markets overall

Disappointingly strong core inflation data precipitated a 0.5% Base Rate increase from the Bank of England (BoE), to 5%. The greater than expected June hike pressured short-duration sterling bonds. After a torrid start to the year, longer-dated bonds found some solace in the more hawkish BoE stance. The stronger pound was supported by the bond market pricing in a Base Rate of 6% by year end. Impacted by the strong pound, UK equities, particularly the more economically sensitive mid-caps stocks, lagged most other developed markets.

Up 0.7% (UK All Share)

After languishing behind its western counterpart for years, is it finally time for a Japanese renaissance?

If monetary policy is akin to playing a round of golf with only a driver (i.e. interest rates), then the bunker that Andrew Bailey finds himself in just got a whole lot deeper after the recent 50 bps rate hike.

Is housing the only aspect you really need to know about China.

Why May 2023 was different from most months.

Why May 2023 was different from most months.

UK markets fall despite better than expected economic data

Whilst economic data was generally better than expected, and the IMF and BoE both abandoned their UK recession forecasts, markets were agitated by rising Core CPI inflation, which helped drive Gilt prices lower. Weaker commodity prices and a rotation away from traditionally defined value sectors saw the FTSE100 decline by -5.4%, though the FTSE250 was slightly more resilient at -3.6%. The Oil sector was particularly weak, dropping -11.6%.

Down -5.1% (UK All Share)

Why May 2023 was different from most months.

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)