Best UK stocks, sectors and markets in first half of 2024

Rolls-Royce Holdings (LSE:RR.) and resurgent NatWest Group (LSE:NWG) and Barclays (LSE:BARC) have delivered for investors after a half-year when dealmaking action accounted for many of the other big FTSE 100 risers.

The bid-fuelled gains by DS Smith (LSE:SMDS), Darktrace (LSE:DARK) and Hargreaves Lansdown (LSE:HL.) formed part of a wider surge in M&A activity, with the UK the second-most targeted country so far this year.

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Takeover interest and robust economic conditions underpinned the overall performance of the FTSE 100 index, which hit a record high in May and rose 5.6% across the first half.

That’s good enough for mid-table in the global stock market league, which is led by Japan’s Nikkei 225. The Tokyo benchmark’s 18.3% surge came as the yen’s 38-year low and impact of shareholder reforms boosted multinationals including Toyota Motor Corp ADR (NYSE:TM) and Nintendo.

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The continued AI-fuelled surge of Magnificent Seven stocks meant the S&P 500 index was not far behind following a rise of 14.5%. That included 31 all-time highs, a run of records only bettered in five other first-half periods since 1928.

The $3 trillion stock NVIDIA Corp (NASDAQ:NVDA) accounted for about 35% of the year-to-date increase in the S&P 500, highlighting the divergence between technology and US old economy stocks. In contrast, the Dow Jones Industrial Average lagged the FTSE 100 with a rise of 3.8%.

Source: SharePad. Past performance is not a guide to future performance.

Excluding those companies in the takeover spotlight, Rolls-Royce was again the standout performer as shares added another 52.4% to take its one-year rise to exactly 200%.

Confidence that Rolls will deliver on 2027 targets means the shares continue to attract strong support, with Deutsche Bank recently upgrading its price target to 555p.

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Together with the contributions of BAE Systems (LSE:BA.) and QinetiQ Group (LSE:QQ.), the engines giant made the FTSE 350 Aerospace and Defence the second-best performing sector in the half year.

The rise of 28.8% was only bettered by Telecommunications Equipment, with the Banking sector in third place, up almost 15% amid a long-awaited upturn in fortunes.

NatWest lifted 42% and Barclays by 36% as income forecasts benefited from interest rates staying elevated for longer than analysts had thought at the start of the year. Economic conditions have also improved, reducing the need for impairment provisions.

Source: SharePad. Past performance is not a guide to future performance.

Among the laggards, Burberry Group (LSE:BRBY) shares endured another tough half year as the slow pace of the China economy contributed to its shares falling another 38% and the wider FTSE 350 Personal Goods sector by 37%.

Croda International (LSE:CRDA) lost 22% amid the continued pressure on the chemicals sector, while other big fallers in the FTSE 100 included Reckitt Benckiser Group (LSE:RKT).

Its shares fell 21% after February’s worse-than-expected fourth quarter results and the loss of a court case filed against its Mead Johnson infant formula business in the United States.

Ladbrokes owner Entain (LSE:ENT) fell 37% on disappointment in the City that the findings of a strategic review aimed at maximising shareholder value backed the company’s existing portfolio of assets, brands and footprint.

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JD Sports Fashion (LSE:JD.) was the third-worst stock in the FTSE 100, down 28% after a half-year that started with a Christmas profit warning and ended with a poor update by key supplier Nike.

In the FTSE 250, 18 stocks fell more than 20% and nine by more than 30%. They included the Imperial Leather PZ Cussons (LSE:PZC), which declined 35% amid continued headwinds from Nigeria’s currency weakness.

Top FTSE 250 performers included Hochschild Mining (LSE:HOC), which rose 67% on the back of a record gold price and the first commercial production at its Mara Rosa mine in Brazil. Currys (LSE:CURY) lifted 42.6% in a period when it found itself a takeover target for US investment firm Elliot.

The 28.9% rise for shares in partnerships-focused housebuilder Vistry Group (LSE:VTY) gave it top-flight status for the first time, taking the place of Ocado Group (LSE:OCDO) after the retail and technology-focused firm fell 62% as the worst performer in today’s FTSE 350.

Source: SharePad. Past performance is not a guide to future performance.

Small-cap investors endured a lacklustre start of 2024, with the AIM 100 and AIM All-Share among the worst-performing benchmarks.

However, 15 AIM All-Share stocks managed to double in value in the first half of 2024. One of the best of them was Filtronic (LSE:FTC), which rose 238% after the wireless communications firm lifted guidance for the 2024 and 2025 financial years and announced a strategic partnership with Elon Musk’s SpaceX.

Source: SharePad. Past performance is not a guide to future performance.