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D-PIMS Weekly Market Update - Week of 1st to 7th November 2021

Today’s Monday Update:

Over the course of the last week, headlines were mostly economy, environment and Covid-19 related:

• On Monday, the U.N. conference seen critical to averting the most disastrous effects of climate change launched amid acrimony, after major industrialised nations were accused of dragging their feet on ambitious new commitments. The COP26 conference in Glasgow comes a day after G20 big economies failed to commit to a 2050 deadline for halting net carbon emissions - a mark widely cited as a condition for preventing the most extreme global warming. Instead, their talks in Rome only recognised "the key relevance" of halting net emissions "by or around mid-century", set no timetable for phasing out coal at home and watered down promises to cut emissions of methane, another greenhouse gas.

• Britain said on Tuesday, that France had freed a British scallop dredger that it seized last week in French waters, and welcomed French President Emmanuel Macron's decision to postpone slapping trade sanctions on Britain over the fishing row.

In the first major agreement of the COP26 climate summit, world leaders have vowed to end and reverse deforestation by 2030. The pledge includes almost £14billion of public and private funds. Felling trees contributes to climate change because it depletes forests that absorb vast amounts of the warming gas CO2.

Nearly 90 countries have joined a U.S.- and EU-led effort to slash emissions of the potent greenhouse gas methane 30% by 2030 from 2020 levels, a pact aimed at tackling one of the main causes of climate change.

Britain and India introduced a plan on Tuesday to improve connections between the world's electricity power grids to accelerate the transition to greener energy. Linking the grids would allow parts of the world with excess renewable power to send it to areas with deficits. For instance, countries where the sun has set could draw power from others still able to generate solar electricity.

• Chancellor Sunak pledged on Wednesday, to "rewire" the global financial system for net zero, saying London will also commit £100 million to make climate finance more accessible to developing countries. In addition, he said London would also support a new capital markets mechanism to issue billions of new green bonds.

British businesses reported faster growth in October, helped by fewer curbs on foreign travel, but the Bank of England is likely to be worried about record rises in the costs faced by businesses, which are being passed on to consumers. The IHS Markit Composite Purchasing Managers' Index (PMI) rose to 57.8 in October from 54.9 in September, its highest since July and well above an initial flash estimate of 56.8. The readings suggest the economy regained momentum last month - despite high-profile supply-chain disruption that led to petrol stations running short of fuel.

The US Federal Reserve announced on Wednesday its plans to start scaling back its $120bn monthly bond buying programme, which has played a crucial role in buoying the US economy as it contends with the ongoing pandemic and rising inflation. The Fed's chair, Jerome Powell, made a point of distancing the announced plans to taper bond purchases with any potential action regarding rising US interest rates. Powell told reporters that, starting later in November, the Fed will reduce the monthly pace of its net asset purchases by $10bn for Treasury securities and $5bn for agency mortgage-backed securities.

• On Thursday, the UK became the first country to approve an anti-viral pill to treat COVID. The Medicines and Healthcare products Regulatory Agency (MHRA) recommended that the drug, molnupiravir, be used as soon as possible following a positive COVID-19 test and within five days of the onset of symptoms. Merck’s molnupiravir works by interfering with the virus’ replication. This prevents it from multiplying, keeping virus levels low in the body and therefore reducing the severity of the disease. Molnupiravir is the first dedicated oral antiviral treatment for COVID.

Investors assailed the Bank of England on Thursday for not delivering an interest rate rise they had bet on, in what may be a sign of things to come as central banks around the world tread carefully to balance inflation risks and economic growth. Although economists do not expect a first post-pandemic rate hike until early next year, investors had priced in a move after what they said were weeks of signalling by BoE policymakers, including Governor Andrew Bailey, that rates needed to rise. The decision triggered a 1.5% drop in sterling and a jump in government bond prices.

• Figures out on Friday, showed U.S. employment increased more than expected in October as the headwind from the surge in COVID-19 infections over the summer subsided, offering more evidence that economic activity was regaining momentum early in the fourth quarter. Nonfarm payrolls increased by 531,000, economists polled by Reuters had forecast payrolls rising by 450,000 jobs.

A trial of Pfizer Inc's experimental antiviral pill for COVID-19 was stopped early after the drug was shown to cut by 89% the chances of hospitalisation or death for adults at risk of developing severe disease, the company said on Friday. The results appear to surpass those seen with Merck & Co Inc's pill, molnupiravir, which was shown last month to halve the likelihood of dying or being hospitalised for COVID-19 patients also at high risk of serious illness.

• Over the week, the main Global Stockmarkets were mostly up, especially Japan, but China and Hong Kong were both down. Returns on overseas investments were given a boost by the falling pound, which lost value after the BOE decided not to raise interest rates this month. All the D-PIMS Portfolios were well up, especially the higher risk portfolios. Overall the Portfolios were helped by their Bond allocations and diversity.

 
The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.


Past Performance is no guarantee of, or guide to future returns.


The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.
 

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