With markets showing every sign of gearing up for the summer lull, fund managers were left to give their takes on the future and in particular British shares.
Anthony Rayner, manager of Miton Asset Management’s multi-asset fund, described Britain as an “empire already declined and struggling to find its way post-Brexit”. He said he had “minimal exposure to the UK”.
Also taking a gloomy view on domestic equities yesterday was Brooks Macdonald. In the fund manager’s latest quarterly asset allocation review, it singled out UK stocks as ones to avoid, saying it would cut its holdings.
“Political uncertainty is weighing on confidence and the domestic economy looks set to come under pressure as inflation begins to weigh on consumption,” the investment manager said. It was notably more optimistic on the wider European equity market where it said: “Valuations are attractive.”
Anthony Peters, a veteran fixed-income broker, struck a gloomier note and told readers of his daily newsletter that indexes hitting records could mean “there is something resembling an asset price bubble developing but I don’t think it is about to burst. Stay along.”
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The latest Hedge Fund Research figures showed industry capital hitting a fourth consecutive quarterly record at $3.1 trillion. However, the data provider noted that much of the inflow was into global macro strategies that “typically exhibit low correlation to equity markets and other hedge fund strategies” — the mega-wealthy version of an each way bet.
In London the FTSE 100 closed up 56.96 points, or 0.77 per cent, at 7,487.87. There was even less action on the domestically-focused FTSE 250, which gained 70.01 points, or 0.36 per cent, to end the session at 19,763.94.
Leading the action among the large caps was Ashtead, which topped the FTSE 100, advancing 51p to £17.10 after analysts at Jefferies, the American investment bank, were positive about the plant hire group on the back of good numbers from United Rentals, an American rival.
Ahead of its second-quarter results on Tuesday, shares in Provident Financial were the next biggest blue-chip riser, up 71p to £23.90. Shares in the subprime lender had taken a knock after its restructuring made bad debts spike but investors appeared to give the group the benefit of the doubt. Also up were Next, with the retailer apparently gaining from the bullish outlook given by Sports Direct. Next rose 103p to £37.83 after Mike Ashley, boss of Sports Direct, said that the discount chain had “smashed the ball out of the park” despite a slump in profits. Sports Direct stock topped the FTSE 250 after the billionaire businessman’s remarks, which sent the shares up 34½p to 335p.
Leading the fallers was Easyjet, which, despite lifting its full-year profit guidance, ended the session down 84p at £13.34 as investors appeared unconvinced by the carrier’s pitch. Easyjet’s numbers dragged down BA’s owner International Consolidated Airlines, which fell 24p to 595p.
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Also prominent among the fallers was Anglo American. The miner published strong second-quarter numbers and announced higher production of iron ore, but this was not enough to assuage City concerns. Its shares fell 32½p to £11.00½.
Triple Point’s house call
Triple Point, a London-based specialist investor, plans to raise up to £200 million through an AIM vehicle that buys social housing assets.
The Triple Point Social Housing real estate investment trust (Reit) will look around the country for social housing projects, particularly supported housing for older or more vulnerable people, to expand the scope of its business.
The flotation aims to raise at least £100 million. Triple Point is promising only to put investors’ money into assets that are “inflation-linked, long-term, fully repairing and ensuring leases with approved providers”.
The investment fund was founded in 2004 and manages more than £470 million for its clients, returning £130 million in the past two years.
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Leases purchased by the Reit will be for 20 to 25 years and at least 80 per cent of the assets will be in supported housing.
Chris Phillips, chairman of the Triple Point Social Housing Reit, said: “There is increasing political and financial pressure on housing associations to increase their delivery and this is creating opportunities for private sector investors to participate in the market.”
Wall Street report
Stocks were little changed amid relief that the European Central Bank did not change its QE stimulus policies. The Nasdaq hit another record close, up 5 points to 6,390.00. The Dow Jones industrial average closed 28.97 points down at 21,611.78.