June was an active month for political and economic developments. On the world stage, putting the US first, the disagreement between Elon Musk and President Trump over the latter’s tax-cutting bill continued, while President Trump and President Xi of China talked directly in order to make progress on tariff and trade talks. Israel launched a pre-emptive strike on Iran, joined shortly thereafter by the US bombing Iranian nuclear facilities. Somewhat surprisingly, a ceasefire was announced a little thereafter and the price of oil, which had risen sharply in response to yet more Middle Eastern conflict, fell back to around the level it had been before the escalation. In a statement, the member countries of NATO also agreed to spend 5% of their GDPs on defence, albeit 1.5% of this will be on wider infrastructure and the time scale for the escalation is fairly extended.
The UK reported rather mixed economic data during the month. GDP growth in the first calendar quarter was confirmed at +0.7%, but the figure for April was disappointing as it shrank by 0.3% according to the Office for National Statistics (ONS). This partly reflected some exporters completing deals ahead of the expected tariff disruption and the end of the stamp duty holiday in early April. Both of these pushed activity into March that would naturally have happened in April. The latest CPI figure at 3.4% released by the ONS was a little higher than generally expected, and this contrasts with labour market data which was softer than anticipated. In light of this somewhat contradictory situation, the Bank of England voted not to change the Bank Rate, which stays at 4.25%, albeit with the Governor of the Bank saying that rates ‘remain on a gradual downward path’.
The FTSE All-Share Index rose 0.5% during the month, but our progress was held back by two stocks. Ibstock, the brick manufacturer, announced a profit warning. This is not a consequence of a shortage of demand, as volumes being produced are well ahead of last year’s level, but more because of the greater cost of restarting manufacturing capacity and a shift in the product mix. Whilst an unanticipated expense this year, the greater capacity should be beneficial in future years. The share price of Burford Capital was also weak in response to a proposed adverse taxation change in the One Big Beautiful Bill Act. The final version of the Act which was passed in July had this clause removed, thus negating this possible negative factor.
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