Quarterly Advisory Report

After the sharp market recovery in the second half of last year, volatility re-emerged as speculation moved from vaccine roll out to longer term economic policy. In equities there was a notable shift from lockdown winners to sections of the market more sensitive to economic reopening and recovery.

Half-way through 2021 and the pandemic – certainly in the UK – seems to have entered a new phase. Economic sentiment has rebounded sharply and equities have continued their long rally. Underneath the hood there have been sharp variations between the value and growth styles indicating it is not all plain sailing.

As governments look forward, we are seeing a return of domestic politics and international brinkmanship - US debt ceiling, Polexit, China/Taiwan for examples; could this be back to normal or evidence of a rise in protectionism? Climate change efforts have also taken central stage, with sustainability credentials becoming a point of differentiation amongst companies and countries.

It feels right to be more optimistic about the future than twelve months ago. New variants are probable but so are evolving vaccines and business models. The adoption of new technologies in business has accelerated in the last couple of years and alongside the focus on decarbonisation and economic changes post pandemic, it is not an exaggeration to suggest that we have entered a new phase for financial markets.