Global Markets

 

Sustained investor optimism over the economic outlook boosted risk asset prices in May. The S&P 500 Index gained 5.0% over the month, the MSCI Europe ex-UK Index rose by 3.6%, and the UK FTSE All-Share Index advanced by 2.4%. Asian and emerging market indices also rebounded, benefiting from signs of improvement in Asian economies and positive economic data from China. Despite some divergence between the US and Europe on the timing of rate cuts, market expectations for summer rate cuts remained.

 

The prospect of lower rates favoured growth stocks, which outperformed value stocks. Small-cap stocks regained momentum, returning 4.6% in May, in line with large-cap stocks.

 

Oil prices retreated from their April peak in May. However, commodity indices still posted positive returns of 1.8% as global demand remained robust.

As of 31 May 2024:

UK 10 Year Gilt Yield 4.32%
US 10 Year Treasury Yield 4.50%
Germany 10 Year Bund Yield 2.67%

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UK Market

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The UK general election has been scheduled for 4 July, with election campaigns underway. Both the Prime Minister and Keir Starmer emphasised “economic stability” as a particularly important theme in their speeches.

 

UK CPI-based inflation eased to 2.3% in April, but remained slightly above the Bank of England's 2% target. The decline in April inflation was primarily driven by energy prices, itself governed partly by the Ofgem price cap. Gas was about 37.5% cheaper in April 2024 than it was 12 months earlier, and electricity was 21% cheaper.

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Ark Insights

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The UK stock market has been on a strong upward trend recently, with the FTSE 100 Index reaching a record high. The financial and industrial sectors have been among the best performers. Mid and small-cap stocks have been performing strongly, driven by a surge in new investment.

 

The UK economy experienced a mild recession in the second half of 2023 but rebounded strongly in the first quarter of 2024, with GDP growth of 0.6%. Meanwhile, driven by overseas buyers, bid activity for UK-listed companies this year has hit its highest level since 2018. Low valuations of UK companies is also a key factor in this potential turning point for how the UK stock market is perceived by international investors following years of underperformance.

 

As always, our Investor Relations team would be more than happy to help you with any queries.

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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.

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