Regional and global politics have continued to take centre stage for investors throughout September.
Tensions have reduced since it was announced that the North American Free Trade Agreement (NAFTA) is being replaced by the United States, Mexico and Canada Agreement (USMCA) which has increased confidence in global markets.
On the other hand, the relationship between the US and China continues to be fractious and doesn’t look like it will be resolved any time soon.
In Europe, Prime Minister Theresa May’s Chequers Plan wasn’t well received by the remaining 27 EU leaders. European Council President, Donald Tusk, dismissed the Plan, saying that while there were some positive elements for post-Brexit relations, the economic framework suggested would not work. News of the rejection hit the pound hard, sliding over half a percent against the US Dollar on the day.
The next significant meeting for the European Council is scheduled for October 18th.
Markets
Global stock markets produced a mixed set of returns in September.
UK large companies (represented in the FTSE 100 stock market) increased over +1% on average thanks to oil companies such as BP and Royal Dutch Shell benefiting from rising oil prices.
On the whole, European stock markets were flat in September, with political concerns about Italy testing the EU’s resolve. With Brexit front of mind for everyone in Europe, the worry is that escalating tensions could put the possibility of Italy’s exit from the EU on the table. Back in 2011, there were talks about Greece leaving the EU which caused quite a stir in the financial markets, and if this is looking like a possibility for Italy, it may cause a repeat reaction which Europe is keen to avoid.
Over the Pond, US stock markets rose on the back of their strong economic performance.
Looking east, Japan has produced some of the highest returns of developed economies with their leading stock market, the Nikkei 225 returning +5% for investors, thanks to a weakening Yen boosting shares in Japanese companies.
In corporate news, Facebook’s share price continues its dire performance, with over $25 billion wiped off its value in September following another data breach affecting nearly 50 million of its users.
Currency
The Pound finished the month up against most major global currencies: US Dollar +0.55%, Euro +0.53%, and Japanese Yen +2.88%.
Investment type performance breakdown
Performance was mixed among the investment types in your plan this month, with bonds (-0.64%) and property (-3.10%) lower. Shares were relatively unchanged (-0.04%) for the month, but commodities outperformed (+1.64%).
Summary with Plan details
September was a challenging month for investors across the globe. Fluctuations in global markets and weaker performance in property and bonds means our plans have ended the month slightly lower than hoped.
But, as long-term investors, we must remember to block out the ‘white noise’ that affects short-term movements and remain focussed on long-term goals. That’s the benefit you get from letting us manage your Investment Plan for you. Our investment team always remain focused on keeping your investment plan on track and will be ready to act as opportunities arise.
