Active investment commentary & analysis

Markets under pressure

Markets remained under pressure during November as fears over slowing global growth dominated sentiment.

A flattening yield curve and concerns over the pace of the Federal Reserve’s tightening path continued to make investors nervous about the outlook for the US economy. Looking at the economic data and sentiment indices, however, it does look like recession fears are a bit overblown. Manufacturing and consumer confidence data have come back slightly from peaks reached earlier in the year, but only to levels that would suggest slightly slower growth. Comments by the Fed’s chief, Jerome Powell, also seemed to indicate a reluctance to push rates too high, too fast. Trade tensions cooled a bit during the month, providing some respite for the Chinese government.

Theresa May enjoyed the sweet smell of victory by securing a draft Brexit agreement with the EU for at least a few hours, before the latest wave of cabinet resignations triggered a fresh government crisis. As has been the case for most of the past couple of years, sterling fluctuated sharply depending on whatever firmness of Brexit appears most likely at any given time. Keen not to allow the departing neighbour to hog all the headlines, the Eurozone continued to provide drama with its usual elan. German economic data disappointed, impacted by the weakness of its automobile sector following regulatory changes. The Italian government remain at loggerheads with the EU on the topic of its budget deficit. President Macron’s popularity reached record lows as strikes affected Paris and the far-right made headway in Spanish regional elections.