In Europe, the rise in infections has already prompted France and the UK to announce new restrictions1. In the US, the rate of weekly cases being reported also increased, moving above 300,000 again, having only fallen below that level at the end of August. Meanwhile, on the vaccine front, reports2 have been published that pave the way for the US’s Food and Drug Administration to set out new, tough standards for the emergency authorisation of a coronavirus vaccine. This came as Johnson & Johnson announced that it was launching phase three of its trials, which involves a single vaccine dose being given to up to 60,000 participants. In the UK, meanwhile, there were reports2 that the government is considering allowing the exposure of healthy individuals to the coronavirus in a bid to accelerate the development of the AstraZeneca/Oxford University vaccine, which is also entering phase three trials.
On the economic front, the US composite purchasing managers’ index (PMI) reading3 held strong at 54.4, well ahead of a score of 50 separating expansion from contraction. However, the US initial jobless claims number again disappointed, coming in at 870,0004. By way of context, this latest reading is and has remained higher than the pre-pandemic record of 695,000, set in 1982, and continually exceeds the worst week of the financial crisis, raising concerns that progress in the labour market is stalling in the US.
Hopes remain focused on more economic support being agreed following the push by the Federal Reserve chair, Jay Powell, when he reiterated the need for fresh fiscal stimulus5 before congress on Tuesday 22 September. Reports followed that indicated both the Democrats and Republicans are open to negotiations, with the Democrats in the process of preparing a US$2.4 trillion stimulus proposal. However, the infighting over the generosity of the package could intensify as Trump announced over the weekend that he had chosen Amy Coney Barrett to replace US Supreme Court Justice Ruth Bader Ginsburg after she died on 18 September2. This is due to the potential scenario in which the Supreme Court could preside over the outcome of November’s US elections, and will judge a case against the Affordable Care Act (aka Obamacare), set for 10 November.
In Europe, the latest economic data release provided clear signs that the Euro area’s services sector has already been impacted by the second wave of COVID-19, as services PMIs came in at 47.6, i.e. in contraction territory.
Meanwhile, the UK chancellor, Rishi Sunak, prolonged support for businesses, swapping the furlough scheme for wage subsidies that are only aimed at those still in work, as part of his Winter Economy Plan, and which aimed to replace previous measures to support the economy following the cancellation of the Autumn Budget. The Bank of England governor, Andrew Bailey, downplayed the prospect of a move to negative interest rates after the latest meeting minutes showed that the central bank’s decision makers were exploring how such a move could be implemented.
In markets, world equities in the four days to Thursday 24 September were down around -3.0% in US Dollar terms and -1.6% in Sterling terms. The difference was due to Sterling, which was lower on the back of tougher COVID-19-related restrictions and hard Brexit concerns.
Cyclical sectors declined the most, with energy (-5.54%), materials (-4.43%), and financial services (-3.97%) stocks the hardest hit. Financial stocks also came under pressure due to another money laundering scandal hitting the headlines, alleging that many of the largest global banks have processed trillions of US Dollars of suspicious transactions over two decades.
Cyclical sectors declined the most, with energy (-5.54%), materials (-4.43%), and financial services (-3.97%) stocks the hardest hit. Financial stocks also came under pressure due to another money laundering scandal hitting the headlines, alleging that many of the largest global banks have processed trillions of US Dollars of suspicious transactions over two decades.
The IT sector (+0.64%) and the more defensive sectors, such as utilities (-0.07%) and consumer staples (-0.24%), outperformed the broader market.
In terms of regional performance, the general risk-off environment meant Emerging Market stocks (-3.06%) underperformed. UK (-3.40%) and European (-3.81%) stocks were also weak reflecting their higher exposure to more cyclical sectors, such as financials.
Within bonds, the general risk-off environment meant government bonds (+0.19%) outperformed corporate bonds (-0.29%) and high yield (-1.51%). US government bonds generated the highest return (+0.30%), as yields moved lower.
However, given government bonds did not generate much in the way of a positive return, despite the sharp fall in equity markets, it highlights how little downside protection government bonds are currently providing.
Our fixed income investments and investment trusts, which were not spared in the sell-off, held performance back during the week of 21 September.
Although our exposure to US government bonds supported returns, our overall lack of duration and exposure to corporate credit detracted.
Meanwhile, the announcement of two large capital raises by Greencoat UK Wind and Hipgnosis weighed on most of our alternative exposures.
Hipgnosis announced a four-day capital raising on Monday 21 September as it sought to raise up to £250 million through an issuance at 116p per share, representing an 8% discount to the previous closing price. While the team managed to raise £190 million in the short time frame – an impressive feat given the market environment – the discount hit performance.
We hope that the Greencoat UK share price can now recover following the capital raise closing on 28 September.
In terms of economic data, US authorities will publish the September jobs report, and attention will intensify on the upcoming US election, as Trump and Biden face their first of three debates on Tuesday 29 September.
The coronavirus will remain in focus, with case numbers continuing to rise in Europe and, with it, an increased probability of fresh restrictions being put in place.
Meanwhile, another round of Brexit negotiations is taking place and several PMI readings will be released from a number of countries.
There is also a special European Council meeting that was rescheduled from 24 and 25 September after the council’s president came into contact with someone with COVID-19.
And although there are no major central bank meetings, we will hear from the European Central Bank President, Christine Lagarde, as she speaks before the European Parliament’s Economic and Monetary Affairs Committee.
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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) John Hopkins University; (2) Reuters; (3) Markit Research; (4) US Department of Labor; and (5) Bloomberg.
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.
David is responsible for spearheading the growth of our wealth management business across the company’s international jurisdictions. Prior to taking on his current role, David was integral in developing the bank’s investment proposition for high-net-worth individuals, trustees and investment consultants. He is also a member of the bank’s executive committee.
He has over 25 years’ experience working for global blue-chip companies in both London and Jersey, and providing investment solutions to a wide variety of clients around the world. Prior to joining Nedbank Private Wealth, David spent 15 years with RBC Wealth Management where he held several senior roles, latterly leading the investment business as managing director and head of discretionary investments in Jersey.
David is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
David is responsible for spearheading the growth of our wealth management business across the company’s international jurisdictions. Prior to taking on his current role, David was integral in developing the bank’s investment proposition for high-net-worth individuals, trustees and investment consultants. He is also a member of the bank’s executive committee.
He has over 25 years’ experience working for global blue-chip companies in both London and Jersey, and providing investment solutions to a wide variety of clients around the world. Prior to joining Nedbank Private Wealth, David spent 15 years with RBC Wealth Management where he held several senior roles, latterly leading the investment business as managing director and head of discretionary investments in Jersey.
David is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
+44 (0)1534 823238
The week of 26 April saw markets start off relatively strongly on the back of positive news on exit strategies and potential treatments. However, by Friday, the tide had turned due to weak corporate and economic data filtering through, while Trump sought to re-escalate tensions with China.
The week of 20 April again saw mixed market sentiment. The negative news focused on plummeting oil prices, disappointing trial COVID-19 treatment results, US travel restrictions, poor corporate earnings and weak economic data. The positive stories centred on further talk of exit strategies and a general slowdown in global case numbers.
David McFadzean was joined by Andrew Yeadon to talk through the main Q1 2020 news driving markets, portfolio positions and what we expect may take place in Q2 2020 and beyond.
The week of 14 April saw mixed market sentiment as the impact of the COVID-19 weighed on corporate earnings results and economic data releases, while further talk of exit strategies and progress on a possible treatment provided some relief.
Last week – the week of 6 April – saw positive market sentiment and markets rise in value with the narrative focused on the slowing rates of growth in the number of new COVID-19 cases in parts of Europe and the US, enabling attention to shift to possible exit strategies from the lockdown and economic activity being kick-started. Unfortunately, we believe markets are being overly optimistic. Economies will struggle to reopen fully anytime soon given the need for increased hospital capacity, widespread testing, improved patient treatment, and, ultimately, the delivery of a vaccine.
Financial markets have always been prone to react quickly, sometimes intensely, to news flows as they try to price in potential disruption to or support for economic activity.
With the coronoavirus pandemic, the focus for many people is on the short term. Retirement planning is still important, but why is now actually a good time to think things through?
The week starting 23 March saw governments and central banks around the world continue to take further steps to counteract some of the impact of the economic shutdown stemming from coronavirus.
During our 19 March webinar, David McFadzean, our head of investments, discussed recent events linked to the coronavirus pandemic with Simon Watts, our senior investment analyst. Due to the number of questions asked during the webinar, we have put together this Q&A, grouping questions together where possible, and using the information available at the time.
2019 marked the 25th anniversary of the opening of Nedbank Private Wealth’s Jersey office. Your memories of 1994, if any, are likely to depend on your interests or predilections at the time or since.
Investment performance is sometimes reported before fees and charges are taken into account and sometimes after everything has been paid, i.e. net of fees.
We publish our total expense ratio to flag to investors exactly what they pay when investing in our portfolios. However, we include costs that others don’t always include.
We operate in a really competitive industry. It’s one of the reasons why some people find it difficult to choose an investment manager – there’s such a huge choice! We believe there are five key points you need to consider when making your selection.
Unlike tossing a coin, portfolio management is not a game of chance and the risks are not usually 50/50. There is a huge range of potential investments to choose from and a professional wealth manager should be able to demonstrate consistent results over a long period with a greater success rate than 50%.
The news flow on the COVID-19 coronavirus took a more negative tone over the weekend of 22/23 February, and we have started this week with a sizeable risk-off move.
The week starting 9 March saw markets opening in disarray, with investors reacting negatively to news that the OPEC+ talks had broken down and the Saudis had sparked an oil price war with Russia over its refusal to cut production. That led to a 30% fall in the price of oil. The biggest impact will be in the energy sector, but it was also taken badly by the broader market.
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