Following a particularly strong April markets had a mixed month in May, although underlying performance has been heavily influenced by movements in currency markets. Performance of some of the main indices are highlighted below:
(All figures are based on bid to bid pricing with income reinvested, in Sterling terms)
Economic data released during the month continues to shine a very positive light on the propsects for growth and how policy makers react to this throughout the remainder of the year will be key for markets. Feeding into this, at the forefront of investors’ minds remain concerns around inflation with headline figures rising steadily as supply side constraints, coupled with the increased demand of re-opening economies, causes pricing pressure. We still believe that these increases are transitory, given the base effects of last year’s events, but any sign of it accelerating or becoming more permanent may lead us to expect Central Bank’s to react more hawkishly. As the last few years have highlighted, policy expectation is incredibly important for market sentiment, regardless of the wider backdrop, so this is something that we will be keeping a close eye on.
Over the month, US and Global market returns have been hampered by a weakening of the US Dollar which fell almost 3% to £/$1.42. Given our overweight position in the UK this has been relatively beneficial to portfolios, all of which have generated a positive return for the month and also outperformed their stated benchmarks in the majority of cases.
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