z-kolkiemz-kolkiem

The week in review

Optimism around a strong Q3 earnings season and rising US employment created a positive environment for riskier assets and equities in the week of 1 November.
Share on facebook
Share on linkedin
Share on twitter
Share on email
Published 9 November
3 mins

What’s happened in markets?

KEY MARKET MOVEMENTS (% change)
 1WK1MO3MOYTD1YR3YR5YR
FTSE All Share1.183.403.1116.9529.746.016.57
Euro Stoxx 502.677.485.2725.8339.1114.0211.57
S&P 5002.038.206.4326.5435.7721.8519.82
Japan Topix2.014.816.7215.3626.3510.1111.14
MSCI Asia Pac.-0.442.66-2.75-2.567.0312.8711.32
MSCI Emerg. Mkts.-0.042.31-2.19-0.1810.9311.2410.35
Jo’burg All Shares0.535.291.5518.7428.0011.1310.06
UK Gov’t Bonds1.754.73-1.40-3.75-2.864.162.57
US Gov’t Bonds0.670.67-0.76-1.91-2.315.322.52
Global Corp. Bonds0.870.88-0.50-0.051.537.124.66
Emerg. Mkt. Local0.30-0.53-3.68-7.07-1.943.792.64

Figures in the respective local currencies as at the end of trading on 5/11/2021.

Positive employment data from the US jobs market in the week of 1 November offered more evidence that economic activity is continuing to gain momentum in the fourth quarter. According to data from the Bureau of Labor Statistics on 5 November, the US unemployment rate fell to 4.6%1 in October. The bureau also recorded larger-than-forecast and broader-based payroll gains over the same period.

Elsewhere in the US, the Federal Reserve’s policy-setting committee announced on 3 November that it would begin tapering asset purchases by US$15 billion2 each month as it begins pulling back on pandemic aid. The central bank had been buying US$120 billion a month worth of bonds and mortgage-backed securities to shore up the US economy.

Meanwhile in the UK, the Bank of England surprised markets by keeping interest rates on hold at 0.1%3. The announcement on 4 November defied expectations of a rate increase following a hawkish tone from Governor Andrew Bailey that it would act against inflation and raise rates.

In the corporate world, this year’s third-quarter earnings season continues to be stronger than anticipated. Even though domestic or cross-border travel hasn’t returned to pre-pandemic levels, online accommodation platform Airbnb became the latest company to record outsized Q3 earnings last week, almost quadrupling profits compared with the same period last year. The company reported its highest-ever revenue and net income, and said it expects vaccination progress and the recovery of international travel to continue to lead growth in 2022.

The global economy may be thirsty for fuel, but OPEC+ – the global alliance of 24 oil-producing nations – decided last week to keep with their measured oil production plan, defying intense international and US pressure to increase output to help control the spiralling cost of oil. Prices are close to seven-year highs, despite economic activity not yet fully recovering to pre-pandemic levels and higher energy costs stoking further concerns about inflation. 

Looking across the markets, we continue to see a supportive environment for riskier assets and a strong period for equities. 30-day returns show generally positive outcomes across all stocks, with large capitalisation (+6.9%) closely matching small capitalisation stocks (+7.1%) and growth (+8.9%) outperforming value stocks (+4.6%), supported predominantly by an exceptionally strong Q3 earnings season.

The Bank of England’s decision to hold interest rates at 0.1% was also supportive for sovereign bonds and longer duration fixed income more generally, with the US dollar also appreciating over the same period, partly due to the Federal Reserve’s decision to tighten its tapering policy.

ECONOMICS  
 Latest

Consensus

Forecast

UK GDP (QoQ)5.51.5
UK PMI57.8
UK CPI (YoY)3.1
EU GDP (QoQ)2.2
EU PMI54.2
EU CPI (YoY)4.1
US GDP (QoQ)2.0
US PMI66.7
US CPI (YoY)5.4

What’s happened in portfolios?

Across our portfolios, our preferences for riskier assets has played out well for investment outcomes. Our focus has been around equities, real assets and alternative strategies as a means of building in inflation protection, strong earnings and diversification.

In our US positions, the strong performance of its stock markets has held back performance slightly versus the MSCI All Country World Index benchmark, but this has been partially offset by our overweight in small capitalisation stocks, which have done well on the back of the better economic backdrop.

In the real assets sector for our alternative investment allocations, Greencoat UK announced that it is planning to purchase a 15% stake in an offshore UK windfarm, which will be funded through a mixture of cash, debt and equity. This equity will be sought though a capital raise over the coming weeks. We see this as a positive move as it allows Greencoat to diversify its own portfolio further and since this increases the size of the fund, meaning it is more likely to allow for better liquidity for investors. The news comes on the back of Greencoat Renewables diversifying its portfolio with the announcement of the Swedish wind farm, its fourth renewable project outside of Ireland, on 22 October, as it seeks to diversify its footprint of renewable energy infrastructure.

What's happening this week?

10 Nov • US Consumer Price Index | 11 Nov • UK Gross Domestic Product | 12 Nov • EU Industrial Production

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.

 

If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth and (1) Bloomberg; (2) Reuters; and (3) IHS Markit.

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights

Investing

The week in review

29 Nov

   |   5 mins

Forward-looking economic data signalled stronger growth in the last full week of November, but concerns over a new COVID-19 variant quickly clouded the outlook.

Investing

The week in review

16 Nov

   |   5 mins

Global inflation dominated news headlines during the week of 8 November, with US prices rising at their fastest rate since 1990, up 6.2% annually, in the face of persistent supply shortages - supply issues that also impacted UK Q3 economic growth.

Investing

What happened in financial markets in October 2021

9 Nov

   |   6 mins

Marking the first in a new series of monthly videos, Rebecca Cretney spoke to Tom Caddick about the positive and negative news affecting financial markets during October 2021 and what that meant for clients’ investment portfolios.

Investing

October's investment market commentary

4 Nov

   |   2 mins

October was a mixed month for markets, with two main detractors and one big plus we would like to highlight.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.

 

We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Please call us today on +44 (0)1624 645000. Our office hours are weekdays from 8am to 8pm (UK time), except for UK public holidays.

 

Or please complete and submit the below form and one of the team will get back to you as requested.

* Required fields

Search suggestions