Market Update – November 2020
Equity markets pushed higher in the first half of the month, driven by decent economic data, positive corporate commentary and earnings and incremental positives regarding potential vaccines / therapeutics / rapid tests.
The second half the month however saw a precipitous fall in equity markets, particularly in Europe as Covid 19 cases surged, hospitalisation rates increased rapidly, and significant restrictions were introduced across Europe. Although not of the same scale as the lockdowns from March and April, equity markets are fearful that these rolling lockdowns will be a feature of the economic landscape until such time as a vaccine is available. The global equity market finished the month 1.8% lower, having been up as much as 4% mid month. The US market fell by 7.4% in two weeks, whilst European markets fell by 8.4%. It is notable that the poor performance of European equities has brought headline index levels back to levels last seen in April. Another notable feature of the sell-off in equity markets this week was how little protection was afforded by bonds, US bonds in particular – although German bond yields have been drifting lower over the last few weeks, US yields have been doing the opposite.