Executive summary
- UK equities slid in August - the FTSE All-Share fell by (2.9%) - following a number of disappointing economic readings and a seasonally quieter market.
- 20 of 23 sectors registered negative performance in August, with Industrial Engineering and Leisure Goods as the weakest sectors, and Tech Hardware and Equipment performing strongest.
- ECM activity continued to decline, by both volume and value compared to July.
- UK public M&A quietened down significantly in August with only four deals announced in the month.
Market drivers in August
UK markets slid amid disappointing economic data
Economic headlines in August
- UK inflation continued to decrease coming at 6.8% (Y/Y) in July as gas and electricity prices dropped.
- Bank of England raised the Bank Rate from 5.00% to 5.25%, the highest level in 15 years.
- RICS house price balance feel to a net balance of -53% in July, the lowest level since Great Financial Crisis.
- UK composite PMI fell from 50.8 in July to 47.9 in August, a sizeable miss on expatiations for 50.3 and marked a 31-month low.
- Eurozone Services PMI fell from 50.9 in July to 48.3 in August, entering contraction territory.
- US inflation increased slightly to 3.3% (Y/Y) in July from 3.0% (Y/Y) in June.
UK markets continue to lag behind European and US peers
Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics
Outflows exacerbated over the summer
Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics
MPC has a long road ahead when it comes to inflation
Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics
How did UK sectors fared in August
August lost some of the ground gained in July for most sectors
Monthly sector snapshot
Drivers of sector performance in August
- Aerospace & Defence stocks continued their rally in August and posted another month of significant gains. BAE Systems share price increased by c.8.3% as it announced the acquisition of the aerospace of Ball Corporation for c.$5.6bn.
- Despite an impressive performance in August, Tech Hardware and Equipment stocks continue to be among the worst performers year-to-date having been heavily impacted by high interest rates and rising inflation.
- Oil prices continue to be a tailwind for Oil & Gas Producers. Prices rose throughout August, with the WTI benchmark up c. 17% over the last three months.
Sector performance (Year to date)
Source: FactSet, Financial Times, Investegate, ONS, Investec Economics
Sector performance (August 2023)
Source: FactSet, Financial Times, Investegate, ONS, Investec Economics
UK ECM activity takes a break in August
ECM activity quietened down as we reached the height of summer
ECM activity snapshot
Primary ECM issuance across the deal size spectrum in August
Public equity fund-raises by sector and highlighted deals
Selldowns
Announced IPOs in August 2023
Source: Source: Dealogic. Analysis and commentary only includes transactions greater or equal to £5m, and only includes transactions involving an issue of new shares i.e. primary share issuances.
UK Public M&A activity in August
2023's scorecard
Selected deals
Source: Company announcements, FactSet, Practical Law
