It’s easy to get caught up in the headlines, and there have been plenty lately. Between rising UK unemployment and Trump’s tariff chaos, you might expect your investments to be struggling. But, in this Astute Market Overview, we take a step back to look at the bigger picture, and it’s far more positive than those headlines suggest.
It has been two months since “Liberation Day”, or as we know it, “the day that Trump announced high reciprocal tariffs and caused markets to tumble”. Markets have since performed strongly, and the bad news failed to dent investor confidence.
The 90-day tariff pause on tariffs (that we discussed in our last video) gave markets room to breathe, and with every negotiated deal, markets unfurled slightly. Whilst media coverage often focuses on volatility or uncertainty, the quiet truth is that, beneath the noise, markets are doing well.
To put that into perspective, the FTSE 100, the UK’s large-cap index, has delivered double-digit gains year-to-date, having dropped over 5% earlier in the year after Trump’s announcements. Similarly, the US-based S&P 500 fell almost 16% year to date at one point following the tariffs, but has since recovered and is now in positive territory for the year.
US
The US remains the focus point for global markets, particularly the trade tensions between the US and China. President Trump and President XI initially engaged in a tit-for-tat ramping up of tariffs, but a temporary truce was reached in May and has now been extended.
Interestingly, despite the US Court of International Trade ruling the tariffs “unlawful”, the US still plan to implement them once the 90-day pause ends in early July, unless bilateral deals override them. So far, the only real cast-iron agreement is with us, the UK (which happened well over a month ago).
What does this mean for you? As an investor, your holdings are likely to be globally diversified (and certainly are if you are in the VT Astute funds), it’s likely that a significant portion is exposed to the US. We expect to see more volatility this year, both positive and negative, but the key is ensuring your investments are aligned with your time horizon and appetite for risk. Staying appropriately invested matters more than reacting to headlines.
Spending review in the UK
Turning to the UK, the Chancellor’s spending review – the second phase, building on from last year’s Autumn Budget – was published this week.
Rachel Reeves outlined increased funding across key areas, including the NHS, policing, affordable housing, and securing home-grown energy. Whilst these commitments are welcomed by many, they also raise questions about how the additional spending will be funded. Attention now turns to the Autumn Budget, where potential tax rises may be introduced to help balance the books and keep the government in line with their fiscal rules. We’ll be keeping a close eye on developments and, as always, will break down what they mean for you.
Unemployment rate
The Labour Market Review for June, released by the Office for National Statistics (ONS), made headlines with a rise in the UK unemployment rate to 4.6%, the highest since post-pandemic lockdowns ended in 2021.
When looking at the bleak data, it’s worth noting two caveats:
- The data was collected earlier than usual, which the ONS themselves flagged makes data more uncertain than usual, and
- It isn’t uncommon for labour data to be revised after release anyway, so we’re highly likely to see this data revised.
Summary
Worry and drama make good headlines, but investors need perspective. Short-term headlines can cause jitters, but long-term planning requires calm and clarity. Through all of the market noise, we are here for you.
Before we finish, we’re proud to share that the VT Astute Conservative Fund has been recognised by Citywire Wealth Manager as the Best Fund Group in the Mixed Assets – Conservative GBP category!
This recognition comes at a particularly meaningful time, as the fund turns five years old next month, meeting its minimum recommended investment horizon. It’s reassuring to see the conservative strategy being recognised based on how it fared over its minimum time horizon, just as it was built to.
This award is a testament to the consistent, risk-adjusted approach our investment team brings to managing clients’ wealth, even in uncertain markets.
See you next time.
