UK shares: hotter than below decks in a heatwave

This opinion column argues that the recent rally in UK equities, especially the FTSE 100, is being driven largely by rotation out of expensive US tech stocks rather than a durable improvement in UK fundamentals. The author notes his own UK overweight has benefited, with the FTSE 100 surging and his exposure rising back above 30%, but he remains skeptical because the move appears valuation-led and flow-driven. He cites LSEG Lipper data showing nearly $10bn of outflows from US equity funds in a week and similar inflows into European funds, but emphasizes that such rotations are usually temporary and can simply inflate multiples. The piece also observes that Europe has had strong earnings momentum — up about 15% in Q2 with more than half of companies beating estimates — helping the Stoxx 600 to new highs. Still, the author argues European markets remain less attractive than the US on long-term earnings power and valuation, and warns against using the FTSE 100 as a simple anti-Nasdaq trade.