October 2020 was a difficult month for most global stock markets as the rise in Covid-19 saw partial lockdowns return to Europe, some US states, and the UK. As with the first lockdown, hospitality and retail have seen the greatest impact, causing many governments to extend or restart their business support measures. It’s expected the manufacturing sector will avoid the sharp shock seen in the first quarter of this year, although markets have moved to reflect a more cautious outlook.
In the US, the wide political divide has been exasperated by this week’s election, maintaining the continued delays in the cross-party agreement required to release further government spending. While the result remains uncertain, you can read our quick guide to the 2020 US election to help understand the impact of the potential outcomes. Although it’s currently unclear how soon the new President will be announced, it is worth noting that the States must settle any election disputes by 8th December 2020.
Data released in October showed that the manufacturing sector has continued to expand at a moderate pace, while the service sector has slowed. Continuing from last month, global consumer spending has been lifted, largely by the spending of savings built up during lockdown restrictions. However, consumer confidence has unsurprisingly dipped as the outlook has become less certain with the global battle against Covid-19 continuing.
Global stock markets saw a split in performance between Developed Markets and Emerging Markets. Developed Markets declined as investor caution rose with increasing Covid cases, while Emerging Markets gained as they continued to show success at containing the spread of the virus. Shares in Europe (-7.30%), UK’s FTSE-100 (-4.75%), US (-2.66%), and Japan (-0.90%) all fell. While Emerging Markets (+2.07%) and Asia Pacific excluding Japan (+2.41%) ended the month higher.
The stock market may have seen significant moves in October, but currency was largely unaffected. Despite the lack of Brexit negotiation progress there was comparatively little change in the British pound. Sterling fell (-0.57%) against the Japanese yen but gained (+0.21%) against both the US dollar and the euro (0.84%).
Investment type performance breakdown
Throughout October, the resurgence of Covid-19 cases in Europe and US weighed on investor optimism driving the value of shares (-2.28%) and property (-4.17%) down. There was also concern about the increased level of government borrowing required to fund the support measures, which caused bonds to decline slightly (-0.13%)
Summary with Plan details
Owing to market movements, the October performance of Wealthify Plans was negative, with those Plans that have more bonds (such as our ‘Cautious’ portfolios) declining less than those with greater share exposure (such as our ‘Adventurous 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 the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future returns