Global Markets

 

Global equity markets gained in August, although the month began with significant volatility. Disappointing US economic data and interest rate hikes by the Bank of Japan triggered a sharp sell-off. However, by month's end, markets rebounded as investors anticipated more aggressive easing by the Federal Reserve. Fed Chair Jerome Powell, speaking at the Jackson Hole central bank symposium, indicated that the US labour market had softened, but the pace of rate cuts would depend on future data. This was interpreted as a potential 50 basis point rate cut in September.

 

Globally, the S&P 500 Index continued to outperform the broader market, with a monthly return of 2.4%. This was driven by expanding earnings growth outside the technology sector. European markets underperformed the US, returning 1.4%. The overall economic backdrop remained challenging, although the Eurozone composite purchasing managers' index (PMI) improved due to the Olympic boost to the French services sector.

 

August was a positive month for fixed income investors. The search for high-quality bonds contributed to a 1.9% gain in global investment-grade bonds, making them the top-performing sector. High yield bonds in the US and Europe were slightly less impressive, rising 1.6% and 1.2%, respectively.

 

As of 30 August 2024:

 

UK 10 Year Gilt Yield 4.01%

US 10 Year Treasury Yield 3.91%

Germany 10 Year Bund Yield 2.30%

​

UK Market

​

The UK economy continued to grow steadily in August. UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 2 2024, following an increase of 0.7% in Quarter 1 2024. Compared with the same quarter a year ago, GDP is estimated to have increased by 0.9% in Quarter 2 2024.

 

The UK manufacturing sector showed further signs of recovery in August. Output, new orders, and employment all increased. Price pressures also eased, with both input costs and selling prices rising at a slower rate. The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers' Index (PMI) rose to 52.5 in August, a 26-month high.

 

The Government has published international trade figures for 2023. In total, the UK exported almost £850bn of goods and services, equivalent to 32 per cent of GDP. In 2023, the UK's services sector recorded a surplus of £153bn, with exports exceeding imports. This figure has rebounded strongly surpassing pre-pandemic and pre-Brexit levels by 13%. Exports to the EU have grown by 9% since 2019, while exports to non-EU countries have increased by 15%. The largest category of UK services exports is ‘other business services’, which includes legal, accountancy, advertising and architectural services.

​

Ark Insights

​

UK equities experienced a positive month, with the healthcare, consumer staples, and industrials sectors leading the gains. In contrast, energy, basic materials, and financials sectors faced declines.

 

Annual rate of the house price growth continued at a higher rate in August, with average prices increasing by 2.4% year-on-year, the fastest rate of growth since December 2022, after a slight pick-up from 2.1% in July. The rise in house prices has been fuelled by improved market activity, partly due to the easing of interest rates which has boosted the confidence of potential homebuyers. Mortgage approvals also reached their highest level in almost two years, reflecting stronger market demand. Ark provides real asset investment solutions to family office clients and helps them build a portfolio of real estate investments that provide a solid long-term income stream. If you would like to find out more, please contact your advisers in the usual way.

 

British consumer confidence held at an almost three-year high in August, bolstered by improving sentiment around personal finances and major purchases, according to a survey in August that added to positive signals in the wider economy. As inflationary pressures have eased, consumer confidence has surged, providing a solid foundation for sustained economic expansion.

 

As always, your advisors would be more than happy to help you with any queries.

​

_____________________________________________________________________________________________

​

​

The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

© Ark Investment Management Ltd. Registered in England & Wales with the company number 09281759.