Market Update

Monthly Market Roundup October, cov. September 2021

Monthly Market Roundup
Below forecast economic growth indicates stalling recovery lead the rest of world
Inflation reaches highest level for almost 10 years
Equity markets fall due to supply chain issues but unemployment falls

September was a month to forget for global markets with falls in the US, UK and major European economies due to supply chain disruptions and an energy crisis. It was even worse in emerging markets which were rocked by China’s continuing slowdown to record the worst quarter since the pandemic last March.

Inflation continues to haunt major economies with Germany hitting a 29 year high and other European economies like France and Spain recording levels not seen for a decade.  In the US, expectations that inflation will remain elevated for a longer period of time was reflected in both headline and core inflation forecasts for 2021 and 2022 being upgraded. Although supply chain issues and labour shortages are contributing to inflation, consumer spending is a more positive cause with Eurozone consumer activity returned to pre-pandemic levels.

Asian equity markets faced volatility in September, pushed down by a weakening Chinese market. Gains made in the first week of the month were undone as China’s imposed power shortages and wobbling property sector, combined with sporadic virus outbreaks, left the region fragile. India was a strong performer but Latin America had a difficult month with the exception of Colombia. Colombia, like other energy-based markets such as Russia and MENA (Middle East and North Africa), rallied as oil and gas prices were driven up.

Inflation concerns and signs from central banks that interest rate rises are drawing closer prompted a sell-off in government bonds, with the 10-year US treasury yield increasing from 1.31% to 1.49%. In the UK, weakness in the gilt market was even more pronounced as the yield on 10-year gilts rose from 0.71% to 1.02%. Corporate bond yields followed government bond yields higher although spreads (the additional yield over government bonds) narrowed marginally.

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Important information

  • Data as of 30 September 2021 unless stated otherwise.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

    Past performance is not a guide to future returns.                           

    This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.