Summer Outlook

At Velarium Wealth, we offer regular updates on market news so you're kept up to speed on current events that could have an impact on your investment portfolios.

Here's a summary of news over the last quarter, and you can download a copy of our full report below:

The performance of financial markets continued to be driven by rising inflation and rising central bank interest rates, but the rate of both has added the fear of recession to the mix. The result of this has been for almost all financial assets to fall in value over the last three months.

The Consumer Prices Index (CPI) has reached 9.1% in the UK and 8.6% in the US. Energy prices have been the biggest driver of inflation, and these have been kept high by Russia’s invasion of Ukraine, but there are signs that inflation is starting to broaden out and central banks have doubled down on their commitment to bring inflation under control. The Bank of England raised rates for the fifth consecutive month when it announced a 0.25% hike in June, while in the US the Federal Reserve increased rates by 0.75%. The European Central Bank ended its programme of bond purchases and has cleared the way for a rate hike in July. Government bond yields have risen sharply as a result as government bonds sold off and corporate bonds have also fallen.

Financial markets have seen very high levels of volatility but US and global equities have underperformed fixed-income markets, with US growth companies leading the fall. Japanese equities have performed comparatively well as the falling value of the yen has helped exporters; however, the relative weakness of sterling weighed on returns for UK- based investors. UK equities fell but outperformed other developed markets due to the contribution of energy and mining companies, as well as utilities and banks.

Summer Outlook July 2022.pdf

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