EQUITIES PERFORMED STRONGLY during the three months to the end of November, clawing back some of the market losses witnessed over the summer as the Chinese authorities cut interest rates again and policy makers in Europe and Japan hinted at renewed quantitative easing to counter the global slowdown in economic activity.
The UK stock market generated a positive return of 2.4% (FTSE All-Share Index) during the three month period to the end of November, underperforming the FTSE World ex UK (£) Index which produced a return of 5.8%. In Sterling terms, the S&P500 Index (+8.4%) was the best performing regional equity market. Emerging Market equities were relatively weak, with commodity prices continuing to fall sharply as more evidence surfaced suggesting the Chinese economy is slowing. The MSCI EM (£) Index rose 2.0%.
Gilts produced a positive return (FTSE Gilts All Stocks Index, +1.0%) during the period. At the end of November, the 10 year Gilt yield was 1.8%. More speculative levels of debt (high yield) marginally outperformed Gilts (BoAML £ High Yield Index, +1.6%).
The UK commercial property sector continued to produce positive returns, with the IPD UK AllProperty Index returning 2.3% during the period under review.
Following the sharp oil price fall last year, indications that US crude inventory levels had stopped rising supported the Brent crude price earlier in the year, however signs of production growth and higher inventories drove the oil price down to $44.60 by the end of November, such that the three month move in the oil price was a negative 18%.