We have highlighted in the chart below the performance of major market indices over the previous month.

As we approach the mid-point of the year, equity markets have continued to deliver competitive returns for investors. Whilst the US market has remained at the forefront, the gap has narrowed considerably with expected monetary policy divergence creating opportunities, reflected in strong performance from the UK and Europe.

During May, the UK Prime Minister, Rishi Sunak, has called the General Election for 4^th July and the official campaigning is now in full swing. So far, there has been no significant market reaction and it would appear that we will see a change in Government, if current opinion polls are to be believed.

Despite the looming election, the UK market has performed very well this year and as you can see from the chart above, this has extended across the whole market with smaller companies recovering strongly. We have seen further M&A activity this month and the much anticipated first rate cut is expected in June/July, which will provide a boost across the board.

Remaining on the theme of interest rates, the expected level of cuts within the US has changed dramatically since the start of the year. Initially, the market was forecasting seven cuts and given the continued resilience of the US economy and more stubborn inflation, this has now come down to two cuts, potentially not until later this year.

The US economy is starting to show some signs of slowing with data this month highlighting weaker spending, slowing inflation and weaker sentiment, overall. Earnings from companies has remained positive and more encouragingly this has been much more widespread and not focused on large technology companies.

So where does all of this leave us? Our portfolios have enjoyed positive returns over the month and have built on the strong start to the year, both in absolute terms and relative to our benchmarks. We await the start of interest rate cuts over the coming months and also the upcoming General Election and will continue to monitor the overall position closely.

THE BOOLERS INVESTMENT COMMITTEE