Potential exciting Q3 ahead for UK stock market with major political events and potential rate cut

From Morningstar: 2024-07-01 05:05:00

Major political events in the UK, such as the upcoming election and a potential rate cut from the Bank of England, are setting the stage for a dynamic second half of 2024 in the country’s equity markets. Despite stagnant GDP, equity markets hit record highs, with companies like Deliveroo, Anglo American, and Hargreaves Lansdown emerging as bid targets.

Rolls-Royce Holdings led in FTSE 100 stock performance in the first half of the year, benefiting from a surge in international travel and rising geopolitical tensions. Other sectors that saw success included financial services, with companies like Hargreaves Lansdown, Natwest Group, and Barclays performing well.

On the flip side, consumer cyclical stocks struggled due to cost of living concerns, with companies like Entain, Burberry Group, JD Sports Fashion, and Whitbread seeing losses. The worst-performing stock in the FTSE 100 was Ocado Group, falling nearly 59% due to heightened competition in the grocery market and the cost of living crisis.

Dividends for top FTSE 100 dividend-paying stocks like Imperial Brands, BT, HSBC, and AstraZeneca are expected to increase in the second half of the year. AstraZeneca’s dividend will reach its highest level in five years, marking a 7% increase from the previous year. Buybacks have become increasingly popular among UK companies, sparking debate over their impact on shareholder value and capital expenditure.

Mergers and acquisitions activity is on the rise in the UK, signaling that the market is undervalued. Companies like Anglo-American and DS Smith have recently been targeted for takeover bids. While this activity can benefit shareholders, there are concerns about how it may shrink the market overall.



Read more at Morningstar: UK Stock Market Outlook: Prepare for An Exciting Q3