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October Market Commentary

November 2020

by Stuart Carswell

There are a number of factors currently contributing to potentially short-term uncertainty in the markets. Over the weekend, Prime Minister Boris Johnson announced that from Thursday 5th November England will be going into a second national lockdown.

There is also the US presidential election to consider, and of course, Brexit is still rumbling on. Stock markets have a tendency to react quickly on the downside during events like this and it can feel uncomfortable. However, it may not be all bad news:

  • Many countries, particularly in Asia, have handled the pandemic better than Europe and the Americas – due to experience of previous pandemics and greater adherence by the wider populous to the rules. This is a large part of the global population and an area of the global economy which is increasingly invested in.
  • For every day that passes we move closer to a viable and distributable vaccine becoming available to combat the pandemic and protect those most vulnerable. AstraZeneca and Pfizer both have promising treatments due to come on-line soon and the UK Government have already ordered millions of doses.
  • We enter this lockdown better prepared and with more information having already seen the impact of the first lockdown on the economy and stock markets. This means the economic impact could be less severe than what we experienced in the second quarter.
  • Some of the best returns in stock markets can come when an economy is in recession. It may even be possible to take advantage of short-term volatility by creating an attractive long-term entry point for investors.
     
    The Chief Investment Officer from Luna Investment Management has provided us with a pre-recorded webinar looking at the effects of current events on the markets through October. This can be viewed by clicking here.
     

    Main takeaways
  • We have seen an increase across the US and Europe, in terms of cases of coronavirus – this could have a negative impact on the economy.
  • Lockdown 2.0 may also bring about further volatility in the stock markets.
  • There are significant policies in place from Governments and Central Banks to support the economy and individuals.
  • 70% of the earnings for the Financial Times Stock Exchange (FTSE) 100 index, are generated globally and not just from the UK economy.
  • The US election is creating further uncertainty in markets.
  • This will may settle once a result of the election is announced – however, there is a possibility that the result could be contested.
  • It is important to remain focussed on long-term objectives.
  • As we saw in March, some of the best and strongest days in the markets follow the worst days.
  • Try not to let the uncertainty impact your own investment decisions.
     

    Have questions?

    Your adviser is available to answer any questions or queries you may have arising from the volatility in the markets at the moment. Please do not hesitate to reach out to us at any time. 
     
    Similarly, if any of your family, friends or colleagues would like a fee-free no-obligation financial review, please click here. We are dedicated to providing advice where it is needed during these uncertain times.

     


    The content in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.
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