Market Snapshot - November 2019

Paul Niven

Managing Director, Portfolio Manager and Head of Portfolio Management, Multi Asset Solutions


Following an initial poor start, as a result of weak economic data from the US and Europe, equity markets rallied throughout October. There were notable gains in Japan and the US, partially as a result of better-than-expected earnings data. Our returns were hindered by the advance of sterling over the month, which gained by over 5% against the US dollar as markets priced out the prospect of a disorderly Brexit. Indeed, Brexit drama continued over the month, with the surprise agreement of a new deal between the EU and UK. However, MPs voted against the accelerated timetable to get the deal done by the Halloween deadline, resulting in the EU granting an extension to January 2020 and a UK general election being called for 12 December.

Globally, there were positive trade developments between the US and China, with an agreement of the outline of a mini-deal made on October 11. ‘Phase one’ of the deal is likely to be signed in November. The Federal Reserve continued to respond to softening data with a third rate cut of 25 basis points (bps); however, it also signalled an intention to pause the easing cycle. The final meeting of the European Central Bank (ECB) under Mario Draghi proved fairly non-eventful, with no real forward-looking guidance provided. However, soft inflation and economic data in the eurozone keeps the possibility alive of further stimulus under incoming ECB head Christine Lagarde. The Bank of Japan also kept rates on hold, but altered its forward guidance to ensure the market continued to expect further easing.

Data generally is softening globally, indicating a growth slowdown. October survey data for the eurozone was weaker than expected, especially economic sentiment, flash purchase managers’ indexes (PMIs) and the German Ifo business climate index, although there were signs of stabilisation. In the US, the unemployment rate continued its downward trajectory to 3.5%, while the PMI saw a slight increase in October following poor September numbers.

Emerging markets’ performance was comparable to developed markets in September as Chinese data was mixed, with both PMIs and third-quarter GDP disappointing. Despite this, September monthly numbers pointed to a pick-up in economic activity towards the end of the third quarter, and trade and money supply figures also showed an improvement.

In October, our European Strategy performed well in both absolute and relative terms, while our external US Value Manager Barrow Hanley and Global Income strategy also saw good relative outperformance. We ended October at a discount of 3.4%. 

Despite the recent recovery, valuation metrics in a number of areas remain reasonable and, providing that growth stays on a positive path globally, equity markets should be well supported. Nonetheless, the cycle is mature and the bull market in stocks is extended, with outlooks for global growth moderating. we expect that volatility will be heightened in coming quarters and we continue to invest in a range of diversified underlying stock-selection strategies. We remain well placed to withstand any further short-term volatility in markets. 

All information as at October 2019, unless stated otherwise.

The Company is an investment trust and conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s rules relating to non-mainstream investment products and intends to continue to do so.

The company is available for retail investors in the UK, professionally advised private clients and institutional investors who seek growth in capital and income from investment in global markets and who understand and are wiling to accept the risks, and rewards, of exposure to equities.

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Past performance is not a guide to future performance. The value of all stock market investments can go down as well as up and you may not get back the full amount originally invested. If you feel you need specific investment advice that takes your individual circumstances fully into account, please talk to a financial adviser. The value of directly held property will reflect the valuations determined by professional independent valuers. Such valuations are the opinion of valuers at a particular time and are likely to be revised. Property and property-related assets can sometimes be illiquid.