During November 2020, many global stock markets saw their best performance ever. This was due to several pharmaceutical firms announcing that they’d developed Covid-19 vaccines with an efficiency rate of 90% and over. This is certainly the news that the world has been waiting for, but it doesn’t alter the fact that many countries are still under strict lockdowns, which has caused many governments to extend or restart their business support measures. In terms of significance, you cannot underestimate the reaction of the market for news surrounding an end to the Covid-19 pandemic, but there’s a long way to go for a comprehensive economic recovery.
The other major news was the election of the 46th US President. There was no “Blue wave”, with the Republicans expected to retain control of the Senate, while the Democrats hold the House of Representatives and gain the White House. This means we’re unlikely to see a dramatic reversal of the market-friendly policies passed by Donald Trump, since the two political parties will need to agree to any changes especially those in taxation both business and personal.
Data released in November showed that the manufacturing sector has continued to expand at a moderate pace, but that understandably the service sector has slowed further. The recent rise in cases and associated return to tighter lockdown conditions has weighed on consumer sentiment, but this has not altered the underlying trend of improving retail sales across the UK, US and Europe as consumers continue to spend their Covid-19 saving.
Markets
The positive news around the vaccine saw some stock markets have one of their best months in history, if not their best month ever. Shares rose by double digits in Europe (13.86%), UK’s FTSE-100 (12.69%), US (10.95%), and Japan (15.04%). While Emerging Markets (+9.25%) and Asia Pacific excluding Japan (+9.10%) also ended the month significantly higher.
Currency
The stock market saw significant moves during November, with currency markets reflecting greater optimism from investors. This improvement in sentiment was coupled with tentative signs of progress in Brexit negotiations or at least the lack of stalemate. This saw the sterling rise against the US dollar (+2.82%), Japanese Yen (+2.50%) and Euro (0.49%).
Investment type performance breakdown
Throughout November, the resurgence of Covid-19 cases in Europe and US was offset by the long-run positives surrounding the prospects of a successful vaccine, causing the value of shares (+10.38%) and property (+10.78%) to both benefit strongly. While immediate concerns remain around the increased level of government borrowing required to fund the support measures, investors remain reassured that policymakers will withdraw fiscal and monetary support in a cautious manner. This saw bonds (+0.46%) post very modest gains.
Summary with Plan details
The strong stock market movements mean Wealthify Plans’ performance was very positive in November, with Plans holding more shares (such as our ‘Adventurous portfolios) rising more than those with a higher bond allocation (such as our ‘Cautious’ portfolios). Our Investment Team continues to actively monitor the financial markets and their impact on your Plan, and as always, we are ready to act in your best interests to events as they unfold.
The figures shown are based on a medium-risk (Confident) investment Plan.
Please remember that past performance is not a reliable indicator of your future results.
With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.
