The week in review

The week of 20 September saw some signs of a deceleration in the growth momentum across both Europe and the US, as supply chain issues continued to limit the goods and services available to meet surging post-pandemic demand.
Published 28 September
4 mins

What’s happened in markets?

FTSE All Share0.98-0.781.3013.5329.323.245.31
Euro Stoxx 500.76-0.361.1419.6134.8110.029.92
S&P 5000.52-0.574.7819.8639.2617.2117.70
Japan Topix-0.458.127.5417.1931.347.5111.64
MSCI Asia Pac.-1.30-0.53-7.55-2.5818.719.9910.29
MSCI Emerg. Mkts.-1.01-0.09-6.59-0.2522.419.479.45
Jo’burg All Shares1.56-2.70-0.6511.7222.757.537.81
UK Gov’t Bonds-1.01-3.43-0.21-5.95-5.483.651.36
US Gov’t Bonds-0.53-0.670.69-2.11-
Global Corp. Bonds-0.33-0.390.91-0.272.386.814.47
Emerg. Mkt. Local-0.68-0.71-1.88-5.223.404.662.69

Figures in the respective local currencies as at the end of trading on 24/9/2021.

The week of 20 September saw the publication of flash purchasing managers’ indexes, which showed a deceleration in growth momentum across Europe and the US. Against this backdrop, the Organisation for Economic Co-operation and Development (OECD) upgraded its collective inflation expectations for the G20 nations to 3.7% for 2021 and 3.9% for 2022, which suggests a prolonged elevated level of inflation.

In the US, we heard more hawkish rhetoric from the Federal Reserve (Fed) as it signalled the start of tapering its bond buying programme, which could begin as early as November if the economy progresses in line with expectations. The bond buying programme has, to a certain extent, been artificially containing bond yield levels and all eyes will be on the reaction of markets as this suppression ends.

In the UK, soaring energy prices and supply bottlenecks continued to cause knock-on effects across a number of industries. Logistical issues over fuel deliveries, as well as the suggestion that supply shortages were about to be experienced, led to a surge in demand and long queues at petrol stations.

In Europe, the German elections dominated headlines over the week of 20 September. And although the votes were still being counted at the time of writing, the latest expectation is for a win with a very small majority for the centre-left Social Democratic Party (SPD). As such, this will mean a coalition is required by any party to form a government. However, coalitions have been a feature of German politics for a long time so the situation is not expected to cause concern, despite the view that negotiations between parties may take until Christmas before the final partnership is formed.

In corporate news over the week of 20 September, the Chinese property giant Evergrande remained the main story as it missed a US Dollar coupon payment, although the company has a 30-day grace period before a default would be declared. This caused a relatively high degree of stress within markets over concerns about China’s high yield debt market and worries that issues for Evergrande could create concerns for other companies’ bonds. That fear, however, seems to have abated and, although we have seen some weakness in markets, there are now expectations for a recovery.

On the COVID-19 front, Pfizer vaccine trials on 5-11 year olds showed promising results. And trials for 2 to 5 year olds and even for 6 to 24 month olds are now expected to be held in Q4 2021.

In terms of equities, there were some falls in markets over the week of 20 September, but this has not disquieted many investors and, although markets came under some pressure, particularly on the back of the Evergrande news story, most losses were recouped by the end of the week. Developed market equities (-0.5%) slipped into negative territory, while emerging market equities gained a little (-0.2%), but continued the recent weeks’ underperformance. With regard to style, both growth stocks (-0.5%) and value stocks (-0.4%) were down slightly. Small capitalisation stocks (0.3%) gained a little, but large capitalisation stocks (-0.5%) were down over the last 30 days. By sector, only energy (2.3%) and healthcare (0.4%) posted a positive performance, with energy supported by rising oil prices. The other sectors underperformed, with materials (-2.3%) continuing to be the worst category, while information technology (-0.5%), utilities (-1.5%) and communication services (-1.7%) also fell. The stand out performer over recent weeks, Japanese equites, stalled a little, although we did see some recovery for the country’s stocks.

In fixed income and among other asset classes, there were no major themes apart from the effects of the Fed’s more hawkish tone working their way through markets.

US Dollar strength has been a key feature as markets have gone through a slight risk-off phase. The strong US Dollar, along with rising bond yields, has also put pressure on gold.




UK GDP (QoQ)4.804.80
UK PMI54.10
UK CPI (YoY)3.20
EU GDP (QoQ)2.20
EU PMI56.10
EU CPI (YoY)3.00
US GDP (QoQ)6.606.60
US PMI61.7060.30
US CPI (YoY)5.30

What’s happened in portfolios?

One of our equity funds, managed by Fundsmith, has been a bit weaker over the last 30 days due to its overweight to the information technology sector, which itself has seen performance held back slightly. However, the fund has delivered an impressive performance in the year to date and continues to generate strong returns for its agreed level of risk. We continue to see positive signs for equity markets overall.

In fixed income, the hawkish remarks from the Fed have translated into slightly higher yields overall, which benefited our short-duration high yield managers AXA and Muzinich.

In property, following the slight reduction in our positions in Target Healthcare, we took the decision to trim back some of our position in Impact Healthcare, again to take advantage of the slightly elevated trading premiums for the investment trust. It is important to note, however, there has been no change to the investment rationale, which we believe is still very much supported, due to the structural shifts in the healthcare market, particularly given the demographic tailwinds, which should continue to benefit Impact, as well as Target Healthcare, over the long term.

In other areas, 3i Infrastructure has been in the headlines as it sold its stake in its oil storage company, Oystercatcher, at a 10p uplift to net asset value.

What's happening this week?

27 Sep • US Durable Goods Orders | 30 Sep • UK & US Gross Domestic Product | 01 Oct • US, UK & EU Markit Manufacturing PMIs

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; and (2) Reuters.

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.

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