June was a grubby month for UK markets in the wake of (more) poor UK inflation figures and the Bank pushing rates up to 5%.
This is a high for the Base Rate since 2008 and the ten-year Gilt yield is back out to Truss/Kwarteng levels again… With markets now pricing-in a peak rate of 6.42% for the UK, it is not surprising that the more interest rate sensitive AIM market fell 3.7% on the month and the index is now down 43% since peak in June 2021. With such persistent gloom hanging over UK stocks we would like to remind readers that that it is precisely when times seem their most bleak that the most wonderful of opportunities are presented to investors who are brave enough to dig into their pockets and put their savings to work.
We are not burying our heads in the sand and pretending that all is OK. The combination of the Bank of England delaying far too long to raise rates and the ongoing Brexit shambles have left our nation with persistently high inflation and the resulting aggressive rate hikes that are hurting both individuals and businesses. The country is going through a tough time, but all is not lost and robust businesses with unique and enduring products will come out the other side of this downturn all the stronger. Share prices are not currently reflecting this, instead focusing on the short-term pessimism that it is not hard to find.
Within the FTSE 100, Ocado shares bounced 53% on the back of takeover rumours, although bear in mind that this still leaves shares down 80% on 2020 peak. Ashtead Group (one of our investments) rose 11%, while miners Antofagasta and Glencore were buoyed by a rally in the copper price. At the other end of the spectrum, BT Group fell 17%, leaving shares close to their COVID-lows and all of the housebuilders were down as mortgage rates rose.
The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.
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.