There has been a strong disconnect between the FTSE 100 and 250 indices since the start of the year. The FTSE 100 is a developed market top-performer, whereas its mid-cap sibling is in line with much less impressive performance of European large caps (chart 1).   Chart 1: European, US and UK Indices’ Performance, Year-to-Date Source: Refinitiv Lipper   I’ve scratched my head as to why European (predominantly large caps) and UK mids have marched in lockstep over the year, and don’t have an answer—the composition of each is quite different, for example. Drop me a postcard if you can

The Bank of England forecast the UK economy will shrink this quarter and inflation will hit 11% by October. Refinitiv Lipper’s Dewi John told Reuters this economy looks grim for British midcaps

Fed Chairman Jerome Powell has alluded to a ‘hot’ labour market in the U.S., as the current number of job openings far exceeds the total number of unemployed – 4.5 million to be exact.  In other words, a tight labour market occurs when job openings (demand) > total unemployed (supply). Moving across the Atlantic, the U.K. finds itself in the same position for the first time ever.  The latest data from the Office of National Statistics shows total job openings at 1,295k, an all-time high.  Conversely, the number of individuals who are unemployed dropped to an all-time low of 1,257k.

U.K. large-cap equities continue to be resilient in the face of multiple headwinds, as the FTSE 100 is the third strongest performer year-to-date.  The index is up 4.7%, only behind to the Brazil Bovespa Index (+9.1%) and OMX Oslo All-Share Index (+10.5%). We note possible reasons for relative outperformance in a prior note which include index composition (higher tilt towards value), attractive valuations and higher dividend yields (A Case for U.K. Equities: Valuation and Yields Look Attractive, March 31, 2022).  However, we note that small-cap companies have underperformed as the FTSE 250 has declined 9.2% year-to-date in the face of

U.K. equities have generally underperformed its global peers consistently over the last decade.  The FTSE All Share has experienced a compound annualized growth rate (CAGR) of 4.7% and 7.3% over the last 5 and 10 years respectively.  In comparison, the Russell 1000 CAGR over this same period is 16.5% and 14.9%, while the Datastream World Market CAGR is 11.1% and 9.9% respectively. The start of 2022 has been one of the most volatile on record which we highlight in a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022).  To this point, the