Market performance November 2020 and your investments

 

November brought another month of action-packed news. While the virus was still taking centre stage, sentiment was undoubtably skewed more towards the positive. This reiterates the importance of maintaining a well-diversified portfolio.  

 

A Shift in Focus

  • November began on a rather sombre note, with a series of tougher COVID-19 restrictions introduced across Europe that sent the markets spiralling. Grim economic data from across the globe did little to lift the mood and it was felt that the chances of ‘normal’ life returning anytime soon were slipping away.
  • This soon reversed when focus shifted away from the virus and firmly on to the US Elections. After a week markets rallied on the confirmation that Joe Biden would become the 46th President of the United States. 
  • Signs that the Senate would continue to be controlled by Republicans lifted markets further on the hopes that Trump’s tax cuts, pro-business policies and deregulation initiatives would stay in place.

 

Biden Victory – The Best Outcome for Markets?

  • The transition of power looks set to take place and the final outcome was the best of both worlds for stocks. While Biden may still have a host of law-suits from Trump, there remains a confidence that these legal pursuits are nothing more than a bid to save face.
  • The election of Biden removes a sizeable amount of uncertainty and will likely result in an easing of trade wars that should boost global growth and corporate earnings. 
  • Stock market volatility is also expected to be lower under Biden too, with less chance of market disrupting tweets catching investors by surprise.

 

A Triple Shot – Vaccines Arrive 

  • More positive news arrived in the fight against the vaccine, initially from the U.S. Food and Drug Administration who formally cleared Gilead's Remdesivir to be used in the treatment of COVID-19, making it the first drug to obtain such status. 
  • Hot on the heels of this came a further boost after news broke that the Covid-19 vaccine being developed by Pfizer and BioNTech was shown to have prevented more than 90% of infections in a study of tens of thousands of volunteers which sent stocks surging further. 
  • Just a week later, US firm Moderna announced that a possible coronavirus drug had been 94.5% effective in testing, providing yet another leg up for markets. As if this wasn’t enough, the vaccine being created in by AstraZeneca and the University of Oxford was also confirmed to be successful, although by this point, market reaction was more muted.

 

China Continues Rebound

  • Further evidence of China’s rebound from COVID-19 was confirmed by industrial production figures that beat expectations yet again. 
  • Retail sales accelerated further and factory output increased 6.9% from a year earlier, outpacing the 6.5% increase forecast by analysts. 
  • Chinese employment improved, we also saw domestic consumers starting to spend more. Retail sales rose 4.3% from a year earlier in October, the fastest growth in 2020. 

 

Brexit Progress Lacking

  • Brexit trade talks entered yet another ‘crunch week’ with optimism that some form of agreement could be reached. However, it seemed to be just another ‘deadline’ with talks going down to the wire yet again. 
  • Despite this, the U.K. signed a trade deal with Japan, its first with a major economy since Brexit. According to Japan’s Ministry of Foreign Affairs, the deal mostly preserves the terms under which we already traded with Tokyo, but it’s estimated that this deal will increase Britain’s GDP by 0.07% compared to 2018 levels over the next 15 years.