Market Commentary July 2021

 

GLOBAL MARKETS
Inflation weighs on the markets…

 

US MARKETS
Shortages constrain growth…

The US market currently has a number of positive and negative factors to evaluate – a massive stimulus package, going directly to the man in the street, and an aggressive growth target from the Federal Reserve, but also a slowing vaccine roll-out, now struggling to meet its daily targets. Moreover, what has become evident from recent data and comments is that growth is now being stifled by shortages of raw materials, which is largely due to Covid, and will work through, and also labour. One reason for the labour shortage is likely, ironically, to be the stimulus cheques that have meant that many seasonal workers will not need to work for the moment. These constraints are fuelling the rise in inflation, but investors seem willing to look through this short-term effect.

Up 2.3% (US 500)

EUROPEAN MARKETS
Data points to continued recovery…

Although economic data in the markets of continental Europe did not make further progress in June, the latest numbers, particularly from the PMI surveys, showed confidence and expectations still to be running at very high levels. The vaccination programmes of the EU nations continue, and have accelerated to the point where they are now ahead of the UK. Also the prospect of those EU countries that benefit greatly from tourism, such as Greece and Italy being able to do so once again this summer, has boosted investor confidence.

Up 1.4% (Euro 600 Index)

UK MARKETS
Mixed on lockdown extension….

UK shares were broadly unchanged in June, with weaker Sterling boosting the FTSE 100 stocks, but some areas of the market were set back by the announcement on 14th June that the anticipated end of lockdown restrictions in the UK would be delayed by another four weeks, with the unlocking now coming no earlier than 19th July. Inflation fears were also foremost in investors’ minds as the May inflation print showed a jump to 2.1%, which, while not unexpected, is above the Bank of England’s 2% target.

0.0% (UK All Share)

JAPANESE MARKETS
Slightly ahead of wider Asia…

In its monthly assessment of the economy, the Japanese government drew attention to the impact of Coronavirus, noting increased weakness in some parts of the economy as people cut back on overall spending. Manufacturing industries, such as car manufacturers are not performing well, but those industries connected to information technology are strong. Overall, it seems likely that the Japanese economy grew by just 0.5% year-on-year in the second quarter, but a preliminary estimate is not due until 16th August.

1.1% (Japanese Index)

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

 

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

 

Key Points
• Although broadly positive, globally equity markets were more muted in June than previous months.
• The US IM and jobs data showed shortages in both materials and labour, constraining the rate of growth.
• Several emerging economies recorded resilient GDP numbers.
• However, Chinese indicators signalling that the economy is decelerating, dampening some emerging markets.
• Eurozone economy continued its recovery.

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

 

Key Points
• Sterling fell against most currencies, in light of its recent strength this year
• Sterling investors in overseas markets relieved to see some weakness in the currency.
• Strong gains in the dollar, despite what traditionally is a weak month.
• Dollar rally eased the nerves of technical analysts, who feared further falls after May.

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

 

 

Key Points
• Bond yields across most markets edged lower, providing positive returns to bond investors.
• Added boast to UK bond investors from weaker Sterling.
• High Yield Bonds were the best performers.
• High yields only part of the global bond market to benefit UK investors this year, some 12% ahead of their government counterparts.
• Further guidance from the Fed suggesting US rates may rise sooner than expected, but still no sooner than late 2023.

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

 

Disclaimer: The information contained in this report is for illustrative purposes only and should not be construed as a solicitation nor offer, nor recommendation to acquire or dispose of any investment. Specifically, the share class used to create the illustrations may not be available on all platforms nor be suitable for individual investors. This report was produced by Collidr Research (“Collidr”) for Affinity Integrated Wealth Management (AIWM) and while AIWM and Collidr use reasonable efforts to obtain information from sources which they believe to be reliable, neither AIWM nor Collidr make any representation that the information or opinions contained in this report are accurate, reliable or complete. The information and opinions contained in this report are subject to change without notice. Model returns are calculated using the most appropriate share class of the underlying funds, having regard to the illustrative nature of the report, with all income being reinvested. As a result, real portfolio performance may vary from model performance. Where model portfolio histories are shorter than three years, historic model returns are substituted prior to inception date with returns from an Collidr performance benchmark. This benchmark is constructed from the average returns of all Collidr portfolios with similar risk profiles that existed during that time. The value of investments and the income from them can go down as well as up and past performance is not a guide to the future performance. Affinity Integrated Wealth Management is a trading style of Buryfield Grange Limited, Buryfield Grange Life Planning Limited and Affinity Integrated Wealth Management Ltd. ‘Buryfield Grange Limited’ is authorised and regulated by The Financial Conduct Authority. Not all services provided by Buryfield Grange are regulated by the Financial Conduct Authority. ‘Buryfield Grange Limited’ is registered in England and Wales at Inspire House, 20 Tonbridge Road, Maidstone, Kent, ME16 8RT. Company registration number 4568338. Collidr Research is a trading name of Collidr Technologies Limited, registered in England and Wales at 34 Southwark Bridge Road, London, SE1 9EU. Company registration number 09061794. Data Providers: Bloomberg L.P. and Collidr.

What our clients say

"Many thanks for your part in all this and I will be mentioning, and I trust that this is acceptable to you, to my accountants, Applied Accountancy, that you have given me excellent advice and been most helpful and prompt about it all."

Mr Leigh-Pemberton CBE DL, Kent

What our clients say

"Ian has always been helpful and hugely knowledgeable. I am a woman on my own and I feel that Ian is someone I can trust with my finances as I find much of this area very difficult to understand. He is professional and competent, as are all his staff."

Geraldine, Surrey – Client for 7 Years

What our clients say

"Finances, investments, pensions etc are all complex issues and generally complicated & difficult to understand. We chose Ian Painter of Affinity to manage our savings because he is very professional in his approach and his knowledge covers every aspect of the market to offer the best advice to secure our investments. We are very happy with the service we are receiving from Mr Painter and his team and have no reservations in recommending him to others."

Martyn, Berkshire – Client for 5 Years