Interactive Investor

US tech and UK mid-caps star in July

29th July 2021 15:30

Alex Sebastian from interactive investor

After a month that saw gains in the West and big losses in the East, what might be in store in August?

Many of the top indices in the UK and around the world had a strong July overall as the global economy continued to recover from the pandemic and stimulus measures rolled on.

The FTSE 100 was virtually flat for the month to 28 July, but the FTSE 250 racked up a nice 2.8% rise over the period.

They were both outshone again though by a great month for the Nasdaq 100, which topped the table of major indices after putting on 3.2%.

The other two American giants, the broader S&P 500 and the Dow Jones, also did well with rises of 2.4% and 1.2% respectively.

In contrast, it was a torrid month over in Asia, with Japan’s Nikkei 225 shedding 4.2% of its value, Hong Kong’s Hang Seng falling 11.6% and the FTSE China 50 down a whopping 14.9% amid a regulatory crackdown.

Looking at single stocks in the FTSE 100, highlights include cyber security company Avast (LSE:AVST) with a 16.3% rise in July, speciality chemicals company Croda International (LSE:CRDA) with a climb of 12.9% and Experian (LSE:EXPN), which was 12.1% higher by the 28th of the month.

Household goods giant Reckitt Benckiser (LSE:RKT) was the worst laggard in the index with a 13.7% fall in value as its weak results went down like a lead balloon with investors.

What will August bring investors?

The FTSE All-Share index saw an average return of 0.7% in August between 1970 and 2017, according to Harriman’s Stock Market Almanac. Some 63% of years saw a positive return in the month.

However, since 2000, performance has declined and the average return had fallen to zero. August ranked ninth of all months of the year. Since 2017, August performance is unimpressive, down 3.5% in 2018, down 4.4% the year after, and up 1.8% in 2020.

During the month, investors will continue to watch closely for signs of inflation getting out of hand, and the potential need for rate rises.

There is no Federal Reserve meeting until September, but the Bank of England will be firmly in the spotlight when it provides an update on the UK economy on the 5 August.

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