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In This Week’s Newsletter:
- Why Is the UK Stock Market Shrinking?
- Top FTSE 100 Dividend Stocks
- What Terry Smith’s Latest Fundsmith Letter Means for Investors
- Bank of England Holds Rates Steady as Voices Calling For Higher Rates Grow
- What Has Andy Burnham Actually Said About Stamp Duty?
- As Chip Stocks Sell Off, Hints of a Rotation Into Software
- LVMH Shares Are Down 50% off Their Peak. Is a Rebound Coming?
Five FTSE 100 companies have already agreed to be taken over so far this year and there’s been just one notable IPO so far—the sovereign wealth fund of Uzbekistan. Warnings about the demise of the UK stock market are growing among fund managers. But the reasons behind this malaise are complex, and there may be hopes for a revival, as I explain in my analysis on the UK’s shrinking stock market.
The Bank of England kept the UK base rate on hold at 3.75% but cited volatile energy prices as a possible reason to increase rates later this year. In the vote, another rate-setter added their support for a rate hike. One portfolio manager said that rate rises, despite what futures markets are showing, are “undeliverable” because of the UK’s weak growth outlook and the uncertainty surrounding Andy Burnham’s first budget as prime minister. We’re piecing together what a Burnham budget could look like here, ahead of what could be some painful news for investors, savers, and taxpayers.
Speaking of difficult news, Terry Smith’s semiannual letter to investors in Fundsmith Equity has caused a lot of discussion in the investor community, particularly as this remains the UK’s largest active fund. Check out Morningstar analyst Daniel Haydon’s take on the £12 billion fund’s strategic overhaul here.
In stock news, Christian Mayes has just updated the monthly FTSE 100 dividend screen to take into account the latest earnings and dividend news. Karen Gilchrist features French luxury giant LVMH in the stock of the week, while also looking at the chipmaker selloff and possible rotation into software stocks.
This week we bring you a whole host of earnings news and analysis. BAE Systems BA., Shell SHEL, Microsoft MSFT and Meta META all feature, and you can find our analysts’ views on each at the bottom of this newsletter.
Ollie Smith, Senior Editor, Morningstar UK
