This time last month we wrote of grubby markets and poor UK inflation figures as the Bank of England pushed rates up to 5%. England were 2-0 down in the Ashes and the media was spouting doom for both the economy and Bazball.
What a difference a month makes. The UK market bottomed on the 7th July (the weekend England began their Ashes comeback) and has been in gently buoyant July form since. The FTSE 100 rose 6% from its early-July low for the year, while the FTSE 250 was a nose ahead at +8% over the same period.
The catalyst for this rally was July’s less bad UK inflation figures, which showed shop price inflation cooling somewhat, which in turn led to some moderation in expectations of where UK rates might get to this year and welcome support for beaten-up Gilt markets. All it took was one moderately encouraging reading for heaving out of favour UK markets to pick up – just imagine what a clear line of sight to peak rates could do for UK assets…
Housebuilders, property companies and building suppliers led the pack after having endured and extended period of share price pressure on the hope that the end of tightening monetary conditions might not be far off. Takeover murmurings continue to circle Ocado this summer, as shares posted another month of gains. At the other end of the spectrum shares in St James’s Place fell sharply on their disappointing interim results and Vanquis Banking Group continues its steady decline, shares are now down a cool 95% since peak in 2015.
In thin summer trading markets all eyes now turn to the August inflation report and the Bank of England’s imminent report. Plenty of scope for further volatility and opportunities for active managers.
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Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.