Affinity Market Commentary November 2021

GLOBAL MARKETS

US leads global markets on the back of strong earnings. UK large-cap rose strongly, while China continued to recover.

US MARKETS

US leads global markets based on earnings

Fears of a sell-off in US equities during October proved unfounded, as the S&P 500 rose by almost 7%; its strongest rise this year. More than half of the S&P 500 constituents have reported Q3 earnings, and, despite some disappointments from major tech stocks, the overwhelming. majority have beaten expectations. However, the causes for concern have not gone away. Supply chain disruptions continue, and economic growth has been more sluggish than anticipated. On the flipside, inflation may yet lead to the Fed raising rates earlier than expected.

Up 7.0% (US 500)

EUROPEAN MARKETS

Torn between higher inflation and earnings

European markets were torn between the optimism coming from US equities, and the uncertainties in Asia. EU markets saw an uptick in inflation, together with weak economic data. Inflation continued to rise across the EU, the Q3 forecasts for inflation and GDP were also poor. This, combined with overseas uncertainties, such as the debt problems of Evergrande, the Chinese property giant, created an unsettling background for investors. However, the ECB restated its belief that the current bout of inflation will prove to be transitory, and this was sufficient to send European equities higher over the month.

Up 4.6% (Euro 600 Index)

UK MARKETS

UK large-cap rose strongly

After several month of leadership by the mid-cap section of the UK market, the large-cap FTSE 100 rose strongly, to dominate UK returns. Continued rises in the price of Brent Crude boosted oil shares – a big component of the FTSE 100, whilst, elsewhere, more modest losses from Whitbread and an uplift in sales forecast from Reckitt Benckiser, helped to bolster sentiment towards the major multinationals in the UK market. Unusually, the FTSE 100 led the way, in spite of stronger Sterling, which is usually a signal to switch into other areas of the market.

Up 1.7% (UK All Shares)

ASIAN MARKETS

China continues to recover

Gains were seen in many Asian markets, including China, which continued to recover from the shocks that hit it during the summer. But Japan and S. Korea dragged overall returns down. China and India both contributed positively to the Asian regional returns during October, as many markets were buoyed by the strength of US equities. However S. Korea continued its decline, falling into correction territory, as foreign selling continued despite strong results from entertainment and tech giants, including Samsung. Japanese shares also trended lower, as the new prime minister failed to make an impression on investors.

Up 1.1% (Asia Index)

 DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

Key Points

• China staged a strong recovery, after recent upsets in the market from Evergrande and the government crackdown on education firms
• Strong corporate results for Q3 drove equities higher in both the UK and US, despite underlying economic concerns
• S. Korea and Japan were noticeably weak, despite generally positive returns from the rest of the Asian region
• European markets were supported by the ECB’s view that the current inflationary pressures are transitory

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

Key Points

• Sterling gained ground against other major currencies
• Fears of an imminent rate rise and lower government borrowing forecasts announced in the budget, helped to push the pound upwards
• The dollar was generally stronger, though it weakened against Sterling
• President Biden’s focus on business (as opposed to environmental concerns) was seen as positive for both the currency and the stock market

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

Key Points

• Global bonds were generally weaker over the month
• Gilts rallied strongly after September’s large losses, driven by reductions in medium term Govt borrowing
• Investment grade corporate bonds were the best performers in the non-sovereign space, recording only a marginal loss
• High yield bonds were the largest negative contributors

DISCLAIMER – The value of investments and the income from them can go down as well as up and past performance is not a guide to future performance. Returns are in local currency unless indicated otherwise. Source: Bloomberg.

Disclaimer: The information contained in this report is for illustrative purposes only and should not be construed as a solicitation nor offer, nor recommendation to acquire or dispose of any investment. Specifically, the share class used to create the illustrations may not be available on all platforms nor be suitable for individual investors. This report was produced by Collidr Research (“Collidr”) for Affinity Integrated Wealth Management (AIWM) and while AIWM and Collidr use reasonable efforts to obtain information from sources which they believe to be reliable, neither AIWM nor Collidr make any representation that the information or opinions contained in this report are accurate, reliable or complete. The information and opinions contained in this report are subject to change without notice. Model returns are calculated using the most appropriate share class of the underlying funds, having regard to the illustrative nature of the report, with all income being reinvested. As a result, real portfolio performance may vary from model performance. Where model portfolio histories are shorter than three years, historic model returns are substituted prior to inception date with returns from an Collidr performance benchmark. This benchmark is constructed from the average returns of all Collidr portfolios with similar risk profiles that existed during that time. The value of investments and the income from them can go down as well as up and past performance is not a guide to the future performance. Affinity Integrated Wealth Management is a trading style of Buryfield Grange Limited, Buryfield Grange Life Planning Limited and Affinity Integrated Wealth Management Ltd. ‘Buryfield Grange Limited’ is authorised and regulated by The Financial Conduct Authority. Not all services provided by Buryfield Grange are regulated by the Financial Conduct Authority. ‘Buryfield Grange Limited’ is registered in England and Wales at Inspire House, 20 Tonbridge Road, Maidstone, Kent, ME16 8RT. Company registration number 4568338. Collidr Research is a trading name of Collidr Technologies Limited, registered in England and Wales at 34 Southwark Bridge Road, London, SE1 9EU. Company registration number 09061794. Data Providers: Bloomberg L.P. and Collidr.