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Welcome to our Q2 2024 investment update from FPC’s Mike Lea, Head of Investments and Senior Adviser…

The global economy has demonstrated improving sentiment, with most major markets avoiding significant recessions. The Office for National Statistics (ONS) confirmed the UK has moved out of a shallow recession.

Market performance data shows that North American and European shares and commodities led values higher with significant gains, while UK gilts continue to lag. North American stock markets, particularly technology-heavy indices like the S&P 500, have driven much of the growth. The UK also saw a resurgence, with the FTSE All-Share outperforming most markets in recent weeks. There is a high concentration of top tech companies in the S&P 500, with Microsoft, Apple, and Nvidia making up 20% of the entire market value. However, the high stock prices for these companies could be detached from reality as forecasts of exponential growth continue. Clients should continue to stick to their long-term strategy meaning that a re-balancing of portfolios is likely sensible.

Despite recent positive trends, fixed-interest investments have remained flat to negative due to persistent inflation and adjusted expectations for interest rate cuts. The Bank of England has maintained interest rates at 5.25%, with a possible summer cut pending further inflation data, but is showing far less inclination for deeper cuts.

The upcoming UK general election is not expected to drive markets, as minimal difference exist in the fiscal policies of each major party. Balancing the books and stimulating growth remains a challenge with high debt interest payments and low growth forecasts.

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Please note, this investment commentary review contains information and opinion, on current economic and political positions, and does not constitute advice. The information is provided in good faith and is believed to be accurate, but as some data is provided by third parties this cannot be guaranteed. Past returns should not be seen as predictors of future returns.