All major equity indices have made gains over the last 12 months in Sterling terms. Whilst the FTSE 100 one year return of 14% appears modest in comparison with a 26% return from the FTSE World Europe ex UK it is still appreciable. Over 5 years the S&P 500 has produced the best total return for Sterling based investors of 133%.
Global equity markets advanced in August and the FTSE World index returned 2.7%. Once again, the riskier areas of the market saw the largest gains, and the FTSE Emerging index was up 5.4%. This is mainly due to momentum from large scale flows to tracker funds, rather than any improvement in fundamental data, an issue discussed in more detail in our two most recent Economic Commentaries. The FTSE World Europe ex UK, World Asia Pacific ex Japan and S&P 500 indices had fairly equivalent returns in a narrow range between 2.6% and 2.8%.
Despite rollercoaster moves for individual stocks such as Provident Financial, the FTSE 100 made headway, gaining 1.6% by the end of the month. The index remains the key barometer of the UK stock market despite its constituents being dominated by international finance, mining, pharmaceuticals and other global businesses. The quarterly rebalance at the end of the month saw two beleaguered UK domestic companies move out of the index: Provident Financial and Royal Mail. They will be replaced by housebuilder Berkeley and UAE-based healthcare group NMC.
The FTSE Actuaries UK Conventional Gilts All Stocks index gained 1.9% in August, trimming the 1-year loss to 3.3%.
Brent oil gained 2.8% in the last month, trimming losses to 14.4% for the year to date and to 57.9% on a 5-year basis. Geopolitical events positively influenced gold prices, extending recovery for the year to date to 9.2%. The gold price is still down 6.3% in Sterling terms on a 5-year view, however, and the price remains volatile, as is the case for all commodities.