It’s been a good month for UK stock markets. Can Andy Burnham take any of the credit?
- The FTSE 100 was the top-performing of the major markets
- The UK economy edged 0.1% higher, putting it 0.7% ahead over three months
- UK bond markets weathered the change of leadership
Labour is currently enjoying a Burnham bounce, tipping above Reform in the polls. In July, UK stock markets appeared to enjoy a similar phenomenon, with the FTSE 100 the top-performing of the major markets. Can investors draw any optimism from the recent surge?
Certainly, there was some tentative good news on the economy, which edged 0.1% higher in May, putting it 0.7% ahead over three months. Inflation fell to 2.6% in June, allowing the Bank of England to leave rates on hold, at least for the time being. There were some limited measures to help household budgets, such as cutting VAT on electricity bills, and retail sales received a boost from warm weather and strong online and clothing sales.
UK bond markets weathered the change of leadership. If anything, they were less volatile than their US peers, where worries over the new Fed Chair sent bond markets into a panic. There was an inevitable hit from the resumption of hostilities in Iran, but overall, investors accepted John Healey’s appointment as Chancellor with equanimity – possibly grateful that they wouldn’t have to contend with Ed Miliband.
Analysis from Ben Yearsley, director at Fairview Investing Limited shows that three of the top-performing five equity sectors in July were UK-based. The UK Equity Income sector topped the charts, with the average fund delivering 4.3% over the month, and even the smaller companies sector saw a bounce, with the average fund rising 3.7%.
It meant some old favourites were back at the top of the performance tables. Former Jupiter star Ben Whitmore saw his Brickwood Global Value fund gain 9.91%, while Andy Brough’s Schroder UK Mid 250 fund also did well. Among investment trusts, Artemis UK Future Leaders, gained 10%.
It is a little early to attribute much of this success to the new Government. It was a good month for value over growth, given the semiconductor meltdown and the strong performance of energy stocks also helped the UK. Financials, another key UK sector, was also given a boost by a strong results season.
However, perhaps it is worth looking on the bright side. These could be green shoots of confidence returning to the UK, and perhaps the new government will deliver the stability that markets have been craving. It’s a long shot, but it’s about time for a change of fortune.
