Two major UK political events in November had a significant influence over financial markets at home. Firstly, the Bank of England raised the benchmark interest rate for the first time in ten years. This move was expected to have a positive effect on markets, but that was undermined by doubts the Bank raised about future interest rate rises, leading to some short-term negativity in the markets. Then, on 22nd November, the Chancellor presented his eagerly-anticipated autumn Budget, only to include a downgraded growth forecast for the economy over the next five years.
Further afield, US President, Donald J. Trump carried out a whistle-stop tour of Asia, all the while continuing his verbal criticism of North Korea.
Staying in Asia, Japan’s stock markets ended another month on a high after positive manufacturing data released towards the end of November helped push them up. European and UK markets meanwhile struggled, but for different reasons. In Europe, the German leadership stalemate put pressure on all European markets, since they generally dislike uncertainty, especially when the world’s fourth-largest economy is concerned. In the UK, the Office of Budget Responsibility’s (OBR) downgrade of economic growth forecasts until 2020 loomed large over domestic markets.
In the currency markets, the Pound had a good month, despite the Bank of England’s interest rate announcement at the start of November prompting a fall in value. By the end of the month, the Pound had fully recovered, particularly against the US Dollar, where it was up +1.82%.
Investment type performance breakdown
There was a mixed set of results from the various investment types contained in our Investment Plans, with higher-risk investments such as commodities (-1.59%), private equity (-1.79%) and shares (-0.62%) delivering a negative return against the backdrop of a challenging market environment. Other investments like property (-0.50%) struggled, although bond investments (+0.17%) helped to buck the trend.*
Summary with plan details
A tough operating environment over the past month has meant Plans across all our investment styles ended November in a slightly negative position, despite a promising start. While it won’t be great news for investors, having some good months and some not-so-good months, (aka market volatility), is part and parcel of investing and to be expected in any year. Whatever happens, it’s important to look at the bigger picture and remain focused on your long-term goals.
*Figures used for each investment type are an average of the relevant Wealthify investment funds.