The buoyant markets of October continued through most of November, taking several equity indices to new all-time highs, until news of the new Covid variant, Omicron, at the end of the month reverberated globally and sent equity markets into their sharpest one-day falls of 2021, pushing all major markets into negative territory for the month.
Staying the course
by Alex Harvey, CFA
Whilst investment is a different game altogether, similarities can be drawn between our industry and the Formula One season
- Global equities rallied 3.3% last week
- US inflation jumped 6.8% in 2021 to the highest level since 1982
- Brent crude rallied 7.5% over the week to $75.2 a barrel
- Gold was flat at $1782.8 per ounce
Death of the traditional retailer or just poor operators?
by Matt Connor
The last decade or so has seen traditional retail undergo a structural change.
- Global equities fell -1.4% last week
- Calls for fresh restrictions mounted across a range of countries, particularly around international travel
- Brent crude fell -3.9% over the week to $69.9 a barrel
- Gold fell -1.1% to $1783.3 per ounce.
Past performance is not indicative of future results
by Gary Moglione
“Past performance is not indicative of future results” is a regulatory risk warning on most investment oriented material that everyone knows but not many people seem to actually implement into their decision making. A Fund Managers performance can dictate whether they become a hero or villain in the eyes of the public and the press. This then influences investment flows and ultimately determines whether the fund thrives or is liquidated.
- Global equities rose +0.7% last week
- 130 countries and jurisdictions endorsed a new global tax framework that has been in negotiations for many years
- Brent crude was flat for the week remaining at$76.2 a barrel
- Gold rose 0.3% to $1787.3 per ounce
The abrupt fall in markets in September was equally abruptly reversed in October, with Wall Street enjoying its best month of the year, the S&P 500 returning 7.0% and closing the month at an all-time high. Other markets generally made progress, but could not keep pace with the US; the only major market to fall was Japan, down 1.4% in local currency terms (-3.8% in USD terms), reversing some of its strong outperformance of September in the face of uncertainty ahead of the general election on 31 October. Emerging markets continued their run of underperformance, returning 1.0% in USD terms in October compared with 5.7% from developed markets, leaving their year-to-date returns at -0.3% and 19.4% respectively. However, stripping out the top performer of the major markets, the US, from the MSCI World index, and China, the weakest of the large markets, from the MSCI Emerging Markets index, paints a rather different picture, with returns much closer together. China stabilised in October but has fallen by 14.0% so far this year as its problems, some self-inflicted, mounted.
In the face of strengthening and broadening headwinds, the unbroken run of seven months of gains in equities came to an abrupt halt in September.
In a relatively quiet month for markets, equities made further progress while government bond markets slipped back.
Experts’ view on China
by Lorenzo La Posta, CFA
When you invest with so many high-quality fund managers, it’s only natural to pick their brains every now and then. We have spoken to a few of them and collected their thoughts on the current situation in China.
As a background, around nine months ago, in November 2020, Ant Financial (Alibaba’s fintech business) was ready to break records with a $37 billion IPO and an estimated valuation close to $300 billion. However, the Chinese regulators pulled the plug on it, officially because of risks around financial security. Since then, the clampdown has extended more broadly, reaching the wider internet and e-commerce sector, property developers, the ride-sharing company Didi Chuxing and the entire private education sector. Markets and more broadly investor sentiment has been under pressure and Chinese stocks are now trading at around 30% below their February peak.
- Global equities fell -1.4% last week
- The delta variant of coronavirus continues to weigh on
investor sentiment, not helped by reports of weakening
- Brent crude fell -7.7% over the week to $65.2 a barrel
- Gold rose 0.1% to $1781 per ounce
The global recovery continued to build momentum during the second quarter, driven by developed markets, where vaccine rollout is proving to be decisive in lifting pandemic restrictions.
Confidence in economic recovery continued to mount in May, with most data and forward indicators pointing to a period of exceptional growth underway. Confirmation from data releases and empirical evidence that this is being accompanied by a sharp rise in inflation caused some investor nervousness during the month, but dovish signals from the Federal Reserve assuaged those concerns and underpinned a continuation of the reflation trade in markets while, somewhat surprisingly, holding bond yields in check.