“The result of current economic conditions and past political instability has made UK equities deeply unloved,” he added. The prospect of interest rates staying higher for longer and growth being “anaemic” has led to little optimism for UK equities, said Dan Boardman-Weston, CEO and CIO at BRI Wealth Management. Consumer sentiment tracked by the University of Michigan improved. “By we should be close to the first rate cut and markets should be anticipating a recovery in the economy.” Washington, DC CNN With inflation continuing to slow, US consumers are taking notice and they’re feeling more optimistic. Thompson at Kingswood predicted that a “major rebound” in UK equities looks likely to have to wait until next summer. During 2022, annual inflation in the United States, as measured by the Consumer Price Index, peaked at over 9 and the future path of inflation remains highly. We continue to maintain a bias for globally oriented businesses within UK equities.” “Accordingly, we remain cautious on the UK domestic picture, and continue to recommend being extremely selective towards domestically-focused UK stocks.
Thomas McGarrity, head of equities for RBC Wealth Management in the British Isles, said the stickiness of core inflation in the UK may require a recession to get medium-term inflation expectation back towards the Bank of England’s 2 per cent target. This was unchanged from June but down from the 7.1% rate in May, which was the highest since the 7.2% rate in March 1992. “The reason is that there has been no clear reduction yet in underlying inflation pressures, and the fall in headline inflation has merely led to expectations for further rate hikes being scaled back, rather than increased hopes of an early reduction in rates,” he said.Īnnual core CPI rose by 6.9% in the year to July 2023. Kingswood Group chief economist Rupert Thompson likewise said the recent fall in inflation has not created any more optimism for UK equities, which have underperformed other markets over the past month. “The flow data has been fairly constant one-way traffic in terms of people still selling the UK, even though it looks very modestly priced,” said Beagles.Īccording to Calastone’s August Fund Flow Index, for example, UK equity funds saw their 26th consecutive month of net outflows.
But citing flow data, he does not think this has happened yet. With UK inflation starting to come down, this should create more optimism for UK equities, said Clive Beagles, co-manager of the JOHCM UK Equity Income Fund.
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