Markets – July (Data supplied by The Outsourced Marketing Department)
Post-Brexit July saw the dust settling a little over the global equity markets as investors re-found their buying enthusiasm. The FTSE100 fared well, improving just over 220 points in the month to close at 6,724.43, recording a 3.38% improvement and, more importantly, an increase of 7.72% in the year to date. The FTSE250 also gained 6.22% to 17,282.9, reversing its June losses, as the weaker pound was interpreted as boosting the overseas earnings of many of the constituent companies. However, given the large sell-off seen in June, the index has lost a nominal 0.84% in the year to date. The junior AIM market joined in the enthusiasm, lifting to 755.89 for a 6.78% improvement on the month.
All other markets covered here improved with the Dow Jones rising by 2.8% to finish at 18,432.24, and the technology based Nasdaq closing at 5,162.13 for a 6.6% lift.
On the continent even the Eurostoxx50 saw gains of 4.4% eliminating some of June’s losses to end July at 2,990.76. Likewise, in Japan the Nikkei225 saw a gain of 6.38%, or just short of 1,000 points to end the month at 16,569.27, although this is still 12.95% down on the year to date.
After the savage sell-offs in June the pound Sterling stabilised a little, losing 2.22% against the US Greenback to $1.32 to record a De facto devaluation of 10.2% since the turn of the year, in the main due to the Brexit decision. It also lost one cent against the Euro to €1.18 for a small dip of 0.84%.
Market analysts confirmed the glut of oil in the markets with national global reserves at record levels. This dampened the price of Brent Crude, as it fell to $42.46 a barrel, down 16.33%, but this is still up 13.89% since the turn of the year.
Gold continued in demand, relishing its safe-haven status, lifting $26.89 a Troy Ounce to $1,349.03. The precious metal has now enjoyed a rise of 25.81% since the end of 2015.
Ahead of Brexit vote, UK’s economy thrives
The UK’s economy, in the three months ending June this year, grew by a better than expected 0.6% (2.2% on a yearly basis), according to the latest data released from the Office for National Statistics (ONS).
These figures showed an increase in economic growth in the period – just prior to the Brexit referendum on June 23rd – albeit most of this being seen in April, before falling off in May and June.
One of the major driving factors of this growth in the overall Gross Domestic Product (GDP) was the biggest increase in industrial production seen since 1999, which was estimated to have grown by 2.1% in the quarter. Most of this came via the pharmaceutical and car industries. There was also strong growth within the services sector, which makes up over 75% of the country’s GDP, as it grew by 0.5%, with the retail sector leading the way.
However, on the negative side, the agricultural and construction sectors contracted by 1% and 0.4% respectively.
The Chief Economist at the ONS, Joe Grice, commenting on these findings, was quoted as saying: “Any uncertainties in the run-up to the referendum seem to have had a limited effect. Very few respondents to ONS surveys cited such uncertainties as negatively impacting their business.”
Meanwhile, the new Chancellor of the Exchequer, Philip Hammond, in one of his first public utterances said: “It is clear we enter our negotiations to leave the EU from a position of economic strength.”
Whilst this (as always) retrospective data is encouraging, immediate post-Brexit data, coming from the closely followed Markit Purchasing Managers’ Indexes (PMIs), showed a sharp drop in economic output from the industrial sector, with it actually registering negative growth.
As a result of these contrary economic indicators, the British Chambers of Commerce commented that it was “far too soon to draw firm conclusions” with regard to the UK’s immediate future growth.