Schroder's Bateman: What is the current picture for UK shares?

Valuations still attractive

The Bank of England recently raised interest rates to 0.5% and the hawkish tone of Federal Open Market Committee meetings suggests US interest rates will also rise this year.

In addition, the reduction of the size of the Fed's balance sheet implies reduced support for financial asset prices.  This backdrop of tighter monetary conditions may continue to negatively affect equity markets, but performance so far across sectors has been mixed. Broadly speaking, ‘value' stocks, such as banks, energy and commodities, have done well, while growth stocks have done poorly.  The consequence of being more of a value-oriented index has seen the FTSE 100 perform relatively better compared to international indices so far this year. We expect the value style factor ...