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LCP Investment Summary - November 2018

Posted on 1 December, 2018 by Administrator

LCP Investment Summary - November 2018

Global equity markets rose 1.3% (in € terms) during November although investors remained nervous following the sharp market falls in October.

It was a volatile month with investors in the U.S becoming generally more negative on the main issues that had up to recently helped markets to hit record highs. Fears increased that the U.S. Federal Reserve would increase interest rates too sharply over 2019 which could slow the economy down, although the Fed’s comments late in the month reassured investors and markets rose accordingly.

There were also concerns that corporate earnings may have peaked as the corporate tax cuts from earlier in the year wear off. The global trade issue, particularly between the U.S and China, rumbled on during November with investor sentiment swayed by the latest comments from all sides.

However the U.S., Canada and Mexico signed a new trade deal on the last day of the month which cheered investors, with all eyes then turning to the post-G20 summit meeting between the U.S and China in Buenos Aires. Political events like Brexit, Italy and Russia/Ukraine added to investor unease at times, as did the fall in oil prices (down over 30% since the start of October).

Bonds

Longer-dated Eurozone bond prices rose 0.8% in November, with the yield on the AAA Eurozone 15+ Year Index falling to 0.85% by month-end. The Euro Broad Sovereign 10+ Year Index rose by 0.7% with its yield falling to 1.77%. AAA-rated eurozone bond yields fell over the month with weaker-than-expected economic and core inflation data possibly leading to a delay in the ECB’s plans to normalise monetary policy. German GDP fell by 0.2% in Q3, its first negative reading since early 2015. Yields also fell late in the month on expectations that the U.S. Federal Reserve may not raise interest rates in 2019 as high as previously expected.

Sample DC Schemes

Our three sample DC Strategies all rose in November with most asset classes having positive returns.

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