The following chart shows the strength of the market rebound with the majority of the losses being retraced in most global markets, less so the FTSE with its high weighting in ‘old economy’ energy, industrials and financials and burdened by Brexit and the UK’s poor response to the pandemic. This is even more evident in the table of sector returns which shows overseas returns when translated back into sterling for UK investors and thus gaining an extra 7% or so from their stronger currencies. Global markets appear to be pricing in a fairly robust economic recovery and a manageable second wave of infections on the basis that we have learned so much the first time round and are thus far better prepared.

The following table, with data courtesy of the JPM Asset Management Weekly Brief as of June 29th, shows the winners and losers in terms of industrial sector and style:

The rebound has been stronger than we expected but we do see the market as acting rationally. The share prices of companies that will survive and ultimately thrive in the new environment, predominantly in technology and healthcare, have been rewarded with strong recoveries in their share prices. Similarly, consumer stocks with strong brands, robust balance sheets and the ability to be sustainable dividend payers have also outperformed their peers. The market is continuing to penalise companies whose business models are weaker and in more economically sensitive sectors, such as banks, energy, industrials, retail and travel.

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