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LCP Investment Summary - November 2021
Posted on 2 December, 2021 by Administrator
Global equity markets rose 0.4% in November (in € terms), with Euro investors benefitting from a strengthening of the U.S Dollar versus the Euro of around 1.9%.
It was a mixed month for equity markets with initial strong performance for the majority of November, before a significant sell-off towards the end of the month. The sell-off was sparked by fears over the new Covid variant ‘Omicron’ and its potential implications on the global economy. A re-introduction of government enforced lockdowns in many locations saw oil prices and share prices for companies reliant on international mobility (e.g. travel companies) particularly suffer.
The US Federal Reserve made comments suggesting that interest rates may rise quicker than previously expected and that the latest bouts of inflation are more than just "transitory". In Europe, inflation fears were given weight with Eurozone inflation rising significantly during the month.
Longer-dated Eurozone bond prices rose 3.8% over the month, with the yield on the AAA Eurozone 15+ Year Index falling to -0.14% by month-end. The Euro Broad Sovereign 10+ Year Index rose 2.9% with its yield falling from 0.77% at the end of October to 0.60% by month-end.
Increasing bond prices are likely due to investors seeking ‘safe haven’ assets in the face of a potential equity market drawdown and heightened uncertainty around how the pandemic might continue to impact the economy.
Sample DC Schemes
Two of our sample DC Strategies rose over the month as most asset classes were up.