Market performance of Uk Gilts and Uk Equities

Explain the market performance of both the UK Gilt and Equity markets over the last 12 months and discuss the influences that have driven that performance.

The market performance for both the UK Gilt and Equity markets, over the last 12 months varied. In 2013, the FSTE 100 had seen its best performance in four years. However, a slight fall in the prices of bonds and an increase in its yield, meant negative market conditions occurred, leading to a bullish Gilt market of 2013. 
(Chu,B.2013) 

Some major UK Equity markets include the FTSE 100 and FTSE All-Share. They are markets where shares are issued and traded.
Within the last 12 months it shows that the FTSE 100 has seen an increase in its index.
(Yahoo.2014) From the 25th Feb 13’ FTSE 100 was trading at 6355.40 compared to 25th Feb 14’ - 6830.50, seeing an increase of 475.1 points (7.5%) during the 12 month period.





Below shows the FTSE All-Share (red line). In the last quarter it seems to outperform the FTSE 100. (Yahoo.2014) 
The FTSE All-Share gives a much higher return in 2013 at (9%), due to the risk of smaller companies. 
Concluding that all UK Equities had seen a big increase in investors return during the 12 months, despite fluctuations.

The UK Gilt market consists of UK Government securities issued by HM Treasury.
Such Gilts range from 2 years to 30 years with current yields from 0.50% to 3.52%. Meaning that these yields increase with maturity, giving a greater return.
(Bloomberg.2014)

For example, The UK Gilt 5 Year Yield has a current yield of 1.64% compared to a year ago of 0.77%. When Bond prices fall but yields increase, there is an inverse relationship. This can lead to potential losses which has been seen within 12 months.
(Heath,A.2013) commen...

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http://www.renaissancecapital.com/ipohome/review/2013globalreview.pdf http://www.tradingeconomics.com/united-kingdom/interest-rate (Trading Economics.2014)
Duncan, H. (2013) Bond yield increase will swell Britain’s national debt over next five years - potentially adding £13k per household This is Money [on-line], 8 September 2013. Available at: 
http://www.thisismoney.co.uk/money/news/article-2415636/Bond-yield-increase-swell-Britains-national-debt-years.html
Q&A: What is ‘forward guidance’? BBC NEWS [on-line], 12 February 2014.
Available at: 
http://www.bbc.co.uk/news/business-23145755
Hohlachoff, A. (2013) Bonds raise game against stocks. Fundweb. 5 January 2013, p29, EBSCO Business Source Corporate Plus [on-line].