Market Commentary – Nov 2020

10 Dec 2020


The MSCI UK All Cap index returned +5.6% during the three months to the end of November, while the MSCI World ex UK index returned +5.9% in Sterling terms. Initially, the UK stock market performance was held back by additional concerns surrounding the UK government’s negotiating tactics around the trade discussions with the EU and a resurgence in COVID-19 cases, which has triggered a variety of new lockdown measures. However, the announcement of successful vaccine trials in November boosted returns of all major equity regions but particularly the UK and Europe (whose indices have more relative exposure to companies that are sensitive to the economic cycle).

In Sterling terms, over the three-month period, the strongest returns were exhibited by Japan (+12.1%) and Emerging Markets (+10.0%) regions. Economies in both areas have benefited from more effective track and trace procedures (which have boosted the pace of economic recovery relative to western economies) and a weaker US Dollar. 

Since the beginning of the year, the UK stock market (-14.6%) has materially underperformed the World ex UK index (+11.8%).

Following a period of strong performance, Government Bonds produced a marginally positive return over the three months to the end of November (+0.5%). Investment grade debt performed better as credit spreads narrowed (+2.5%). ‘Riskier’ high yield debt managed to produce a marginally positive return (+2.9%), underlining the more constructive global investment environment.

The Brent crude oil price ended the period at $47.6/barrel, a rise of 5.1% from the price observed at the end of August. Optimism that vaccine deployment will result in a resurgence in demand in 2021 improved sentiment.

During the three months to the end of November, the gold price fell 9.7% to $1777/oz as demand for the ‘safe haven’ asset waned. Marginal Sterling weakness versus the US Dollar reduced the loss for UK based investors (-9.5%, to £1,331/oz).


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