Why the Upcoming Brexit Referendum Is Causing More Volatility
The UK’s sector-wise performance
Over a one-year time period, the various sectors of the United Kingdom performed according to the movement of the global market (VEU). Among all the sectors, only consumer staples provided a positive return of 7.4%. The metal sector emerged as the biggest loser during the period. The poor performance of the metal sector is due to the fall in commodity prices (DBC) and the slowdown in the Chinese economy (FXI) (YINN). The energy sector fell 18% during the same time period, as the fall in crude oil (USO) prices affected the profit margin of the major integrated oil and gas companies.
Year-to-date performance of the various sectors
Since the start of the year, the global market saw a massive selloff due to weaker Chinese PMI (purchasing managers’ index) numbers and the fall in crude oil and commodity prices. However, in mid-February, the fall in the US dollar (UUP) due to the Fed’s cautious statement boosted the movement of commodities and crude oil. This drove the movement of the equity market. Simultaneously, the UK’s metal sector and energy sector rose 21% and 11% on a year-to-date basis, respectively.
In the next part of this series, we’ll analyze what the valuations indicate for the UK.
Browse this series on Market Realist: