The UK market had a merry spring in its step in May, with the main market FTSE 100 up 1.6% on the month, and up 7% on the year.

This is however still playing catch up to its global peers and behind the S&P 500, 10.6% ytd, the DAX, +10.4% and the Nikkei 225, up 15%.  The domestic star, however, was the UK smaller indexes with the FTSE AIM All-Share up 5.8% on the month, pushing it back into positive territory for the year, up 5.4%. It all pales into comparison really when the market capitalisation of Nvidia rose past $3tn, greater than the size of the FTSE 100…

As ever, macroeconomics is dictating the pace with inflation figures falling to 2.3%, but still stickier than anticipated, missing the consensus of 2.1%. This ‘miss’ will put more pressure on the Bank to get its timing right, but with the General Election in full swing, has inevitably pushed back the timing expectations and number of cuts. 

The rumbling (and rambling) BHP Group bid for Anglo American collapsed at the end of the month, after the two couldn’t come to agreement on the latter’s demerger of its South African platinum and iron ore operations. After lengthy back and forth the £39bn was consigned to the bin. 

The theme for this year in the UK has been mergers, bids and delisting. All of which highlight the relative value in the UK and the poor sentiment. According to Bloomberg, there is currently $135bn worth of M&A (proposed, pending and completed) underway including International Paper Co’s bid for DS Smith, The Czech Sphinx, Daniel Kretinsky’s bid for International Distribution Services (née Royal Mail), Thoma Bravo’s bid for Darktrace and Hargreaves Lansdown (now withdrawn bid by CVC Partners).  This coupled with UK listed firms such as Flutter Entertainment, moving listings to New York paints for a sorry sight in the City of London. We hope that following the General Election, a truly concerted effort from whichever victor promotes the UK stock exchange through managed deregulation and red-tape cutting, ensuring a prosperous future for it.

Hopefully a stable General Election result will ensure some stability. According to Citigroup, history shows that UK equities trade relatively flat to down in the six months after elections, but up about 6% following victories by the Labour party, who are c.20 points ahead in the most recent polls. 

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.

Share this

How would you like to share this?

Twitter icon
Linkedin icon
Email icon