OCM Commentaries

Market Commentary 24th June 2021

By June 24, 2021 June 28th, 2021 No Comments

Equities Remain Mixed while Investors Become More Risk Seeking


Choppy financial markets have been a common theme since the end of April, and the performance of the indices in the last 7 days shows this past week has been no different. As investors have continued to speculate on the back of data flows while also attempting to anticipate the slightest change in the outlook of policy makers, maintaining a balanced portfolio has become even more important in today’s sensitive economic environment. As a reminder of recent updates, your portfolio has been repositioned accordingly for today’s macroeconomic environment as well as for the very positive outlook in the medium to long term. For those of you with a keen eye for monitoring the whipsawing financial markets, we hope this brings you some comfort as we try to reduce the short-term volatility of your portfolio.


By directing you towards the indices data first, the performance over the past week has been mixed. The US has posted positive returns on the back of the upward revisions to 2021’s GDP growth forecasts, with both the cyclical sectors and technology benefitting since this week began. Europe is largely red this week, leaving UK mid-caps as the only index that have moved in a positive direction. That being said, Europe has come off its weekly lows as this past week has progressed.  Japan and other export-led Asian nations have negatively performed this week, while China has seen momentum build as investors become slightly less concerned about the region’s inflation expectations. Despite the mixed week for equities, the non-equity sectors have moved in one direction – downwards. Index linked gilts have struggled the most on the back of investors buying into the transitory inflation argument. Out of the other non-equity sectors, the riskier end of fixed income has performed the best in relative terms, while risk-averse gilts push their year-to-date losses further. This broad move out of fixed income markets could suggest investors are becoming more risk seeking overall.


Moving onto the OBI portfolio dataset, we can see that performance has been mainly flat over this past week, meanwhile both benchmarks are negative. The OBI portfolios are broadly flat due to investors continuing to switch between value- and growth-oriented assets as they try and anticipate the likely inflationary environment later this year. Those OBI portfolios at the lower end of the risk spectrum have subsequently benefited from their focus on the less sensitive and sustainable assets, albeit all of the portfolios have benefited from their balanced asset allocation this week. The benchmark’s underperformance on the other hand has likely been driven by their elevated gilt holdings, something which the OBI portfolios are tactically underweight to.




Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value.  You may not get back all of your investment and the final value of your investment will depend on the performance of your portfolio.  The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations.  Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges and trading spreads.  Unless stated, income is reinvested into the portfolio.  The information contained in in this document is for information purposes only.  It does not constitute advice or a recommendation or an offer or solicitation for investment.


So far this week we have had a number of Fed officials provide more context on their views for US growth, inflation and, as a result, monetary policy. As expected, they have continued to repeat the Fed’s announcement that we watched last week. Despite largely remaining in line with the Fed’s previous announcement, equities across the globe (US, Europe, Asia) have remained sensitive to these updates, as investors continue to focus on the inflation narrative. We are yet to hear from arguably the most interesting events this week, the Bank of England interest rate decision, and the US PCE Price Index. Although we are yet to develop our ability to see into the future for these events and similar events going forward, we can likely guarantee one thing, and that is financial market volatility.


Key Events We Are Watching This Week:


  • Wednesday 30th: UK GDP Growth Rate QoQ final.
  • Friday 2nd: Non-Farm Payrolls.

This Day in History


On this day, in 1509, Henry VIII is crowned King of England in Westminster Abbey, London. During his tenure, over 70,000 people were executed, with 2 of his wives contributing to this figure.



Jason, Gina & Ben