This month’s market commentary looks back at November and more recent events that have transpired along with some of the key considerations.
Covid-19 vaccine drives markets higher
On 9th November, Pfizer announced the creation of a successful Covid-19 vaccine. Although this was a slightly tricky vaccine to transport and deploy, requiring storage at -80c, markets around the world reacted with unbridled enthusiasm, and countries and stocks that had been the hardest hit, rose strongly on that day. This announcement was followed fairly quickly by two more, including the Moderna and Oxford vaccines, which do not require special handling, and can therefore be deployed more quickly and easily.
Biden victorious in US presidential election
After another tiresome wait for a US election result to be confirmed, Joe Biden emerged as the next president. At 78, when he enters the White House, he will be the oldest man ever to do so. With this, and the Democrats having failed to win the Senate, it is not clear that a second term for Biden can be assumed, but for the moment, the market was content to breathe a sigh of relief and look forward to more stable international relations, and a return to post-pandemic normality sometime in 2021.
Brexit trade agreement sentiment waxes and wanes
After ending October on a negative note, sentiment, as measured by the strength of Sterling, rose during November, as investors looked to the EU summit on 19th November for some positive news on a trade agreement. In the event, positive news was in short supply, and tensions were once again beginning to escalate as the month drew to a close. The deadline for a deal is the end of the year, but in practice, allowing for Christmas and time for all EU nations to approve any proposal, time will effectively have run out by the middle of December.
Japan continues to power ahead
Japanese stocks continued to be among the best performers outside of Europe in November. The Nikkei 225 rose by some 15%, whilst the TOPIX gained just over 11%. The Japanese market continues to benefit from the appointment of the new prime minister, Yoshihide Suga, who is expected to roll out his own, improved version of Abenomics. Shares were also buoyed by the Democrat win in the US election, with hopes that an easing of the Sino-US trade dispute may now be more likely. This has led to a growing feeling that now might be a good time for many investors to revisit the Japanese market.
Mahfooz (Maz) ShamsuddinDirector & Chief Information Officer