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The Month In Markets – November 2023

The Month In Markets - November 2023

Just as night follows day, it turns out that in 2023 a good month in markets follows on from a bad month! While asset markets struggled in October, we saw a widespread rebound in November.

In aggregate, it was a strong month for equities and bonds. The apparent catalyst for the rally was a drop-in interest rate expectations across most major economies. In 2022, both bonds and equities struggled as markets were caught out by inflation and the subsequent interest rate rises required to tackle inflation. It makes sense, therefore, that a fall in inflation along with the expectation of deeper interest rate cuts in 2024 would lead to a recovery in bond and equity markets.

At the very start of November, the US Fed and Bank of England (BoE) had their latest monetary policy meetings. At both meetings, interest rates were held at current levels, with central bankers resisting taking interest rates any higher at this juncture. This was the second meeting in succession that both the Fed and BoE had held interest rates steady and was enough for the market to believe that we may now have reached peak interest rates for this cycle. The prospect of the end of rate rises gave markets a much-needed boost after a difficult October.

There was a second boost to markets in mid-November when inflation data suggested the Fed and BoE had been correct in rejecting the chance to take interest rates higher. Inflation data from the US and UK showed promising signs as it continued to fall closer to the 2% target. While there is a way to go, the improvement from 12 months ago is stark. Headline inflation for the US came in below expectations at 3.2%. Shelter (rent) is the largest component of the US inflation basket, and this is still driving US inflation, however forward-looking data indicates this should begin to fall in 2024 and should help the US Fed get inflation closer to the 2% target. Here in the UK, we saw headline inflation fall to 4.6%, from the previous month of 6.7%. This was the biggest drop since 1992, which was, in part, driven by lower price caps on energy coming into play on the 1st October. The fall in inflation was much needed for Prime Minister Sunak, who vowed to halve inflation by the end of 2023, a target he now looks like achieving. The impact of lower inflation on asset prices was dramatic. Small and mid-cap equities, which are often seen as more interest rate sensitive, rallied significantly. The UK mid-cap index rallied over 6% during November, outperforming the large-cap index by more than 4%.

Labour markets continue to prove resilient with the most recent US jobs data showing a further 150,000 jobs were created. While the speed of growth is declining, we are yet to see any major cracks in the labour market. If people are staying employed, they will likely continue to spend and keep the economy going – remember consumption typically accounts for around 2/3 of GDP in most developed markets. While employment levels remain low, we are now witnessing real wage growth for employees, where the average wage is increasing above the level of inflation. Here in the UK wages grew on average by 7.7% (inflation 4.6%) and in the US wages grew by 5.2% (inflation 3.2%). Positive real wage growth should be a boost to consumption. For much of 2022 and parts of 2023 inflation was outstripping wage growth, contributing to the cost-of-living crisis, hopefully, we are now at a sustained inflection point.

There were differing outcomes for gold and oil during the month. By month end gold was knocking on the door of all-time highs (in USD). The same cannot be said for oil, where the price of a barrel has fallen from $95 in October to $75 in November. This is despite elevated geo-political tensions in the Middle East. It appears concerns around demand going forward, as economies are expected to slow in 2024, are weighing on the price. Inventory data highlighted higher than expected levels of oil inventory in the US, pointing towards weaker demand. Lower oil prices, while bad for oil producers, should act as an effective tax cut on most consumers and corporates and be a net positive to the overall economy, while further easing inflationary pressures. 

The Autumn Statement ‘for growth’ was a bit of a non-event for markets, with no major policy changes at this stage. There were some positives for workers, with cuts to National Insurance, and at the margin, this should support consumption. On the day markets were fairly benign.

After months of back and forth between inflation and interest rates, November felt like a big month where the consensus very clearly shifted to developed markets now being at peak rates, and confidence that the battle against inflation has largely been won. This shift and easing of financial conditions were enough to lead to a rally across most asset classes. It was once again a timely reminder about the dangers of being out of the markets, with equities delivering in one month what one might currently expect from cash over one year. With many investors still sat on the sidelines, there is a wall of money which could re-position into risk assets should sentiment pick up. While this would be a short-term boost, we are drawn to the potential for long-term returns from equities with low valuations and bonds with high all-in yields.

Andy Triggs

Head of Investments, Raymond James, Barbican

Risk warning: With investing, your capital is at risk. Opinions constitute our judgement as of this date and are subject to change without warning. Past performance is not a reliable indicator of future results. This article is intended for informational purposes only and no action should be taken or refrained from being taken as a consequence without consulting a suitably qualified and regulated person.

Appendix

5-year performance chart

Foundations for the future

In the last Monthly Market Commentary of the year, Raymond James’ European Strategist, Jeremy Batstone-Carr, looks back over November and discusses a shift in investor sentiment, contrasting economic performances, fiscal policy decisions in the UK and Europe, and more.

The Week in Markets – 25th November – 1st December 2023

Today we enter December, the last month of the year. The origin of the name December can be traced back to the Latin term “Decem”, which means ten, because it was the tenth month of the original Roman Calendar. For investors December has historically been a profitable month, with the so called “Santa Rally” pushing asset prices higher; many will be hoping for Santa to deliver once again.

The festive period seems to be a long way away for Bank of England (BoE) Governor Andrew Bailey, as he spoke earlier this week. Inflation in the UK is currently at 4.6% after a considerable drop in October, however, Mr Bailey has conceded getting inflation to the target of 2% from this point will be “hard work”. A large part of inflation falling has been due to the decline in energy prices, lowering prices at the pump and also importantly household energy bills. However, there are still inflationary pressures in the system which could be difficult for the BoE to crack without negatively impacting the economy and labour market. The impact of higher interest rates continues to bite on households, but market expectation is that we will see rates stay in a restrictive zone until a potential cut in rates early next year.

Rail worker strikes have been a prominent feature this year but are they finally coming to an end? Members of the RMT union have agreed a pay deal, ending an 18- month row.  Workers were not just protesting for an increase in wages but for further job security and improved working conditions. Guarantees have been included into the agreement and this may be the catalyst for other train unions to agree deals.

The latest update to Q3 US GDP was released on Wednesday and showed the economy had grown more than initially reported, coming in at 5.2%, boosted by business investment and spending. This is the fastest pace of expansion since Q4 2021, despite the pressure of higher interest rates. The US Federal reserve will certainly look at the results before their next monetary policy meeting this month and may be concerned about “an economy that keeps on rolling”. Despite this, investor odds for a rate cut before May 2024 have increased to 77.1%. 

The November Beige book by the US Federal reserve provides an economic outlook on the US economy. The main takeaways from the latest entries were consistent with what we have been seeing in markets. The labour market remains tight, especially for skilled labour, households are displaying greater price sensitivity with the higher interest rate environment, the looming risk of a recession remains, and geopolitical instability remains a key concern.

Last week we reported on the postponement of the OPEC meeting and this Thursday, Saudi Arabia, Russia and other members of OPEC agreed to voluntary oil cuts totalling 2.2 million barrels per day for 2024.  The organisation, now in unison, are focused on lowering supply with concerns over weaker global economic growth in 2024 in order to avoid a supply surplus. Brazil will also be the latest country to join the organisation in the new year. Staying with commodity markets, gold is set to remain on track for its second monthly gain, with the price getting very close to its all-time high.

Warren Buffet’s right-hand man, Charlie Munger passed away this week. Once described by Bill Gates as the “broadest thinker I have ever encountered”, the Berkshire Hathaway vice president helped build the conglomerate into the giant it is today. One of his most famous quotes came from the annual meeting in 2017 – “A life properly lived is just learn, learn, learn” as mistakes are vital to becoming a success. He was well respected among his peers and is certainly an investing icon to study.

Temperatures have dropped however our optimism for markets hasn’t as we continue to see data releases strengthen the case for interest rate cuts in the new year. As always we maintain the necessity for diversification within portfolios in order to benefit from market moves, while also aiming to protect portfolios from heightened volatility.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 18th November – 24th November 2023

We start this weekly covering the Autumn Statement, delivered by Chancellor Jeremy Hunt. Mr Hunt has been Chancellor for 13 months and if you remember back to his appointment under then Prime Minister Liz Truss, his first acts were to shred her disastrous economic plans.

“Autumn statement for growth” was the main theme as Mr Hunt announced the key measures of the 110 policies. Arguably the greatest change was the reduction to National Insurance contributions from 12% to 10%. This is set to be implemented from the beginning of 2024 affecting 28 million people, an average saving of £450. Prime Minister Rishi Sunak, sat to the right of Mr Hunt, was acknowledged by the Chancellor for delivering on his promise to the UK to halve inflation in 2023. Further promises were made to grow the UK economy and the OBR have adjusted forecasts for GDP from shrinking by 0.2% to growing by 0.6% in 2023. As pre-announced, the national living wage is also set to rise to £11.44 from April 2024. The increase is aimed at easing some of the cost-of-living burden people are facing.

On Thursday it was announced that UK energy regulator, Ofgem, will raise the price cap by 5% in January 2023. While energy prices are lower than 12 months ago, it’s worth remembering that households were given around £400 in support for energy bills last winter – this time there are no equivalent measures. The Labour party has discussed further windfall taxes on oil and gas companies as a way to help with energy bill support.  

Oil prices have trended lower from the spike we saw in early October when brent crude rose to $96 a barrel, and we saw a 4% dip on Wednesday as OPEC (Organisation of Petroleum Exporting Countries) postponed their output policy meeting. The meeting has been pushed back to next week Thursday as producers around the world struggled to agree on output levels heading into 2024. It is rumoured that African countries such as Nigeria and Angola have pushed against consensus for greater oil output. We also saw inventory data released from the US which showed a much higher level of oil inventory than anticipated, potentially signalling softer oil demand.

Sam Altman, the CEO of Open AI, has had a tense week as he was fired and rehired from the firm in just five days. The developer of ChatGPT was fired last Friday over concerns the artificial intelligence (AI) development was too rapid, lacking the safety required. Mr Altman is certainly a popular figure as over 80% of his 750 strong workforce threatened to resign if his reinstatement was not imminent. Microsoft, Open AI’s largest investors also intervened as they hired Altman on Monday in a de facto role. The possibilities of AI are incredible, and it is key there is stability within the management teams developing it.

Nvidia released their Q3 results this week and once again delivered stellar revenue and earnings growth. However, there was some cautionary messaging from the company around Chinese restrictions, which would be a headwind to 2024 growth. The share price has been exceptional in 2023, however, despite the very strong Q3 numbers the China news held the shares back. While Nvidia is currently a clear market leader in GPU chips for artificial intelligence, it will be interesting to see how the competitive landscape evolves over the coming years as more competitors enter the market place.

In a week light of economic data there were some positives to be taken from manufacturing and services PMIs which came in above estimates in Europe and the UK. US jobless initial claims data was lower than expected, another positive sign for the labour market. While the global economy is far from firing on all cylinders, it is yet to show any major signs of cracking, despite what economists predicted 12 months ago.

There was much excitement heading into the Autumn Statement, although this quickly fizzled out as the Chancellor played with a straight bat. Nevertheless, there are some policy measures which should help ease some of the burden on consumers, while also stimulating investment from businesses. The reaction from markets to the statement were fairly muted, with bonds and equities broadly trading sideways this week. Trading volumes have been thin in the US, with the market shut for Thanksgiving yesterday. Next Friday sees us move into December, with many investors hoping that the Santa Rally, which appears to have begun a little early this year, can continue.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week in Markets – 11th November – 17th November 2023

We began this week with unexpected news, the return of former Prime Minister, David Cameron to parliament. He resigned in 2016 after the UK voted to leave the EU as he had backed the remain campaign. Current Prime Minister, Rishi Sunak appointed him the new Foreign Secretary in a cabinet reshuffle on Monday.  His first meeting this week has been over in Kyiv to meet President Zelensky, confirming the continued support the UK aim to give the Ukrainians.

UK inflation figures were released on Wednesday, coming in below expectations as headline inflation for October dropped to 4.6% (year-on-year), down from 6.7% the previous month. This was the largest one month drop since April 1992 (2.1%) and this figure meant Mr Sunak has delivered on his promise to halve inflation before the year end. Core inflation (excludes energy and food) fell to 5.7% (year-on-year) from 6.1% in September. Last week we saw the UK economy stagnate with flat GDP data and further to the inflation figures, investors are almost certain we have seen the peak in interest rates. This is a far cry from the summer months when peak rates were expected to be 6.5%.

UK wages including bonuses slowed to 7.9% in the 3 months leading to September. This slowed from 8.2%, a previous record increase. Employment also rose by 54,000 jobs over the same time period, this was a slowdown from the 80,000 jobs created previously.  The data suggests the UK labour market is still tight with businesses struggling to hire new workers, helping to push up wage growth. While wage data is still strong, with unemployment broadly trending higher in 2023 it is unlikely the Bank of England (BoE) will increase rates at the next meeting. The days continue to tick down towards the 22nd of November, the date of the Autumn Statement, where the Chancellor says he aims to “get people back into work and deliver growth to the UK”.  We will have to wait and see whether the Chancellor pulls any rabbits out of the hat to support UK equity markets.

After a quiet period for mergers and acquisitions (M&A) in the UK the market sprung to life with two deals this week. The luxury chocolate company Hotel Chocolat was snapped up by Mars for £534m, a 170% premium to the previous days share price. This is a huge premium, although the price paid is still below what the company was valued at the start of 2022. It’s another sign of the value that still exists within UK equities. We also saw UK pub chain, Youngs agree to acquire City pubs in a deal that came with a 46% premium. With inflation appearing to be stabilising alongside interest rates, we may see a flurry of further M&A deals into year end.  

US inflation data was softer than expected on Tuesday and drove a rally in markets. US headline inflation for the month of October fell to 3.2% (year-on-year), with core inflation dropping to 4%. This data again gave investors greater confidence that the US Federal Reserve are not going to increase rates further, and markets are now pricing in four 25 bps Fed cuts next year. The Russell 2000 (small cap index) jumped 5.4% on Tuesday, with the S&P 500 rising 1.9% and the tech-heavy Nasdaq rising 2.4%, the largest daily percentage gains since April. Global equities also joined the rally with the mid-cap UK index rising 3.4%. In general, all assets have rallied this week, with bond yields falling (prices rising) and equities rising. The strong moves over the last three weeks are a timely reminder about the risks of moving out of markets on a short-term basis.

This Friday morning UK retail sales disappointed, falling by -0.3% (month-on-month) possibly pointing towards a more challenged consumer. The apparent bad news was treated as good news by the markets with the UK equity market advancing around 1% on Friday. Government bond yields fell, with the 10-year UK government bond yield now approaching 4%.

This was always going to be an eventful week, with key data releases occurring, resulting in a strong week in markets. It may be too early to call a Santa rally with markets still having to digest events and speeches next week. Our focus remains on diversification within portfolios across asset class, sectors, styles and regions.  The benefits of long-term investing have allowed us to take advantage of the short term opportunities.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Month In Markets – October 2023

The Month In Markets - October 2023

October was a challenging month; however, gold bucked this trend, producing strong returns. The precious metal is held across portfolios at Raymond James, Barbican. We believe it is important to broaden the investment toolkit, from simply equities and bonds, to include other asset classes such as commodities and infrastructure.

Gold is often thought of as a safe-haven asset, while also having an element of inflation protection, given it is a real, or physical, asset. It’s perhaps because of these characteristics why the gold price pushed above $2,000 oz during the month of October. Geo-political risks escalated significantly in October following the events in the Middle East. The heightened concerns and risks to the global economy will likely have pushed investors to assets such as gold. However, government bonds, often an asset class that performs well in crisis, failed to respond. The attacks by Hamas led to concerns around the supply of oil from key producers such as Iran. The oil price rallied, pushing close to $100 a barrel. Higher oil prices are inflationary, through cost-push inflation and as such inflation expectations nudged higher during the month, likely explaining why government bonds were out of favour, and gold was the safe-haven asset of choice.

Equities fell during the month. The chart does not tell the full story, with the small and mid-cap parts of the market coming under pressure. Within the UK the mid-cap index fell by over 7%, while the large-cap UK index fell by circa 4%. This trend of large cap companies outperforming was consistent across developed markets. There will have been a range of factors driving this; mid-cap stocks are often seen to be more interest rate sensitive – higher oil and higher rate expectations were apparent over October. A flight to safety in equities often results in investors moving up the market cap spectrum to larger companies, which can be perceived to be more reliable; the events in the Middle East could have triggered such a move.

US inflation data showed that inflation remained steady at 3.7%. While this is a dramatically improved picture from 12 months ago, inflation has nudged up from the 3% low in June. The main reason for this is the rise in oil prices over the summer months – this feeds straight into gasoline prices in the US, pushing inflation up. We’ve also seen the shelter (rent) component of inflation remain sticky, although there is an expectation this will moderate as we head into 2024. UK inflation also remained steady, at 6.7%. Again, the inflation picture has improved over 2023, however, the headline figure is significantly above target. We should see a drop in the figure as the latest energy price cap came into effect on 1st October 2023, with the average household bill expected to decline by 7%.

While certain leading indicators slowed around the globe, suggesting that higher interest rates are beginning to bite, Q3 GDP data from the US showed the economy grew at an annualised pace of 4.9%. Excluding the COVID-19 rebound this was the highest US GDP release since 2014.  The consumer remains strong in the US, supported by excess savings built up during months of lockdown. US government spending is running at elevated levels, often seen during periods of recession, which is driving growth. This is unlikely to be sustainable over the long-term, given the current budget deficit.

Following previous pauses by key central banks it is possible we are now at, or close to peak interest rates for this point in the cycle, with interest rate cuts likely to start in 2024. We have taken the opportunity to step out of money market funds, which were held as a cash proxy, and add more to short-dated government bonds, effectively locking in attractive nominal yields and adding a more defensive tilt.

Andy Triggs

Head of Investments, Raymond James, Barbican

Risk warning: With investing, your capital is at risk. Opinions constitute our judgement as of this date and are subject to change without warning. Past performance is not a reliable indicator of future results. This article is intended for informational purposes only and no action should be taken or refrained from being taken as a consequence without consulting a suitably qualified and regulated person.

 Appendix

5-year performance chart

The Week In Markets – 4th November – 10th November 2023

While the pace of data releases almost returned to normal this week, following last week’s barrage of numbers, the information that was released was no less interesting.   UK GDP was released this morning and was flat (0%) over Q3. This was higher than the forecasted -0.1%, which means the UK will avoid a recession in 2023.

The UK economy is certainly weak at the moment as eyes are turning towards the Autumn statement on the 22nd of November when the Chancellor, Jeremy Hunt, is expected to announce growth measures for the UK. The pressure is mounting on the Conservative party as Mr Hunt noted, “The Autumn Statement will focus on how we get the economy growing healthily again”. The Bank of England (BoE) will certainly take note of the slight avoidance of a recession, however, there are data releases such as inflation that they will be keener to see; there’s an expectation of a sharp decline in headline inflation as we head into year end.

US Fed Chair, Jerome Powell, spoke twice this week following the decision to hold rates stable at the last Monetary Policy Committee meeting. On his second time addressing the International Monetary Fund, climate activists stormed the stage positioning for the end of fossil finance. Mr Powell was able to continue his speech minutes later claiming a balance was needed as the Fed weigh up “the risk inflation could reignite versus the central bank causing unnecessary economic damage”. Investors are bullish about another pause in interest rate hikes with the US Fed scheduled to meet once more before the year end.

Oil this week has slid to the price of $76.34 at the time of writing, and on Tuesday fell 4%, the lowest since late July. Rising OPEC crude exports helped ease fears about a tightening market as we are seeing an extra one million barrels per day of supply since their August lows. US crude oil stocks rose by almost 12 million barrels last week. This is a good sign for the US as falling prices help to reduce inflation, helping them get closer to the 2% target. Investors, however, will remain on alert as the current geo-political conflicts could threaten supply.  

Inflation figures for China were released on Thursday at -0.2% (year-on-year) as their economy dropped into deflation. It appears weak demand remains a challenge for Chinese policymakers as exports and factory activity contracted. Beijing have already ramped up measures to support the broader economy, such as one trillion-yuan of sovereign bond issuance, but there are calls for further supportive measures in order to prevent the economy falling further and threatening business and household spending.

WeWork is a company that provides flexible office space for workers, becoming the largest tenant of office space in New York and London over the last few years. This week saw the company file for bankruptcy. When WeWork was founded in 2010, the conditions were perfect as commercial property had been emptied out following the global financial crisis. However, securing long term office leases in prime locations around the world and then finding enough short-term tenants, whilst making a profit, just became too large of a task. The fall from grace of WeWork has been stark – in 2019 the company was valued at $47bn. Wecrashed, a show on Apple TV, is a remake of the true events and certainly provides more insight into the demise of the business.

After last week’s fireworks in equity and bond markets, this week has been a little more subdued. Hawkish rhetoric from US central bankers helped push equities and bonds lower at the end of the week. As we approach peak interest rates, with the possibility of rate cuts in the not too distant future, we have taken the opportunity to step-out of some short-term money market holdings, into short and mid maturity government bonds, effectively locking in attractive nominal yields, while making portfolios slightly more robust in positioning.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 28th October – 3rd November 2023

This week we transitioned from October to November, leaving behind a very difficult month in markets, with the first few days of November proving very strong for equity and bond investors. We are just two days away from Guy Fawkes night, the conspirator who attempted to blow up the Houses of Parliament in 1605. November has certainly started with a bang as we have had multiple data releases and events causing fireworks in markets.

Arguably the most anticipated news of the week was the US Federal Reserve meeting on Wednesday. The base rate of 5.5% is a 22-year high and this went unchanged as the Fed opted to pause once more, following on from the previous meeting where rates were held steady. Market expectation was that the Fed would continue the pause to further see the impact higher rates were having on the economy. We have seen the US economy stand resilient despite the steepest rate rises in four decades, just last week we reported US GDP at 4.9% in the third quarter. Fed Chair, Jerome Powell was hawkish with his commentary as he stands firm on achieving the target inflation rate of 2%, however markets are convinced we have now seen the peak in rates, estimating only a small chance of an increase in the December meeting.

The Bank of England met on Thursday and followed suit as they also held rates steady at 5.25%. There was a change in the voting dynamic as Sarah Breeden succeeded Sir Jon Cunliffe on the monetary policy committee (MPC), and she was one of six to vote for rates to remain unchanged. Inflation played a vital role in the decision as it fell steeply in the month of July before staying sticky in the following months. It is estimated that inflation will drop further to 4.25% by the end of 2023. UK GDP projections for Q4 have weakened to 0.1% so the MPC must consider if this is now the peak in rates, as they do not want to overtighten policy, which could tip the UK into recession. There has been a huge change in UK rate expectations over the last 6 months, with the market believing in July that interest rates would be close to 7% by Q1 2024, which has now slipped to 5.25%.

Inflation in Germany has fallen to 3.8% in October (year-on-year), down from 4.5% in September. This is positive for the Euro zone as rates across Europe fall towards the 2% target, with the European Central Bank making it three out of three central banks to pause rates. The German economy however is still being weighed down as GDP fell by -0.1% for Q3. It has only grown twice over the last six quarters. There are concerns that the current geopolitical uncertainty will add further pressure to the economy as Germany still suffers from elevated energy prices since the war in Ukraine started.

Take a moment to guess what the Netherlands inflation rate for October was. Just two months ago it was 3% and preliminary results for the month of October came in at -0.4% (year-on-year). We can attribute this steep fall to the change in energy prices as gas and electricity peaked in October 2022. However, with a major European economy falling into deflation, it is a reminder how quickly outlooks can change.

The US Fed will have felt vindicated in their decision to pause, with US Non-Farm Payrolls data coming in weaker than expected on Friday. 150,000 jobs were added to the economy, against an expectation of 180,000. The slowdown in hiring is an indication that interest rates are continuing to bite, and the US economy is likely slowing as a result. 

It has been a very strong week in markets, with confirmation of central banks holding rates steady, coupled with a weakening in data, leading investors to believe that the headwind of rising interest rates may now be behind us. By the close of play yesterday the UK mid-cap equity index had risen 5.8% during the week, and at the time of writing is up another 1% today. The US S&P 500 index was up around 4.5% and again has nudged higher today. These weekly returns from equity markets are similar to the one year returns available on cash at the moment; it’s a reminder about the dangers of attempting to time markets. It wasn’t just equities that performed well, with bond yields falling (therefore prices rising). We wrote about the US 10-year Treasury yield reaching 5% last week; that has now fallen to 4.5%, providing significant capital uplift this week.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

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