The suspension of Woodford’s flagship fund stole the conversation this month.
Woodford, tensions and tariffs: The Markets in June
Stock markets in June trended higher with the FTSE 100 rising by around 4%. There was however a summer feel to markets with many days passing-by with not much happening, along with waiting on any outcomes from the G20 summit in Japan.
Companies where take-over rumours have circulated include: Ted Baker, which could be vulnerable following on from its profit warning, Saga & Whitbread. There was also news that Serco had approached Babcock with regard to a merger. The activist investor who recently took a stake in Merlin Entertainment and loudly proclaimed that the group was undervalued was quickly proved to be right, when a consortium made a 455 pence offer for the group towards the months end.
Fall from grace for star fund manager
The unfolding story that dominated the market, and featured on the front page of the Financial Times on no less than seven occasions, was the fall from grace of star fund manager Neil Woodford, who suspended dealings in his flagship open-ended fund. The effects of this have been seismic and, once again, demonstrate that illiquid assets belong in a closed-ended investment trust. There will be much more news over the months ahead with potential consequences for the investment community.
Tension pushes gold and oil up further
The rising trend in the gold price showed no signs of running out of steam, hitting a 5-year high on the back of middle-east tension and potential for a fall in US rates in July. The oil price was another beneficiary, although hardly the right word, of US/Iran tensions.
The ongoing trade spat between China and the US was again to the fore and is the visible consequence of what is viewed as a growing cold war between the world’s two super powers.
Overall volumes in the market have been somewhat lower, despite periods of volatility. Investors growing interest in World Cups has helped offset Brexit and political blues, which are increasingly leading to a wait and see mentality for business in general. With England’s cricket & football progress to the semi-finals now in the balance, perhaps our focus should move to lawn tennis doubles, but please Andy stop touching hands at the end of every point!
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