November Market Commentary


The EU followed through with its threat to take legal action against the UK over plans by Boris Johnson to breach the agreed terms of the Brexit withdrawal agreement and thus break international law. Questions arise as to the impacts of this, with the UK set to leave the European Union in a matter of months, and these legal proceedings typically playing out over a number of years. The UK has since made moves to alter the illegal bill.

Brexit negotiations have continued beyond Boris Johnson’s self-imposed deadline of October 15th, as both sides seem convinced that a deal can be reached and talks can progress on to the so-called tunnel phase, where discussions on issues other than fish will take place. Whilst Johnson has said he intends to fully prepare for a withdrawal with no-deal, it seems nobody has taken this threat seriously, with markets seemingly pricing in the chance of a deal, and the EU not convinced of Johnson’s conviction in a no-deal.

The UK meanwhile is struggling with ever-increasing COVID-19 cases, with hospitals in hotspots now nearing intensive care capacity again for the first time since before the lockdown. The government, in response, has brought in new measures of regional lockdowns measured in three grades from moderate to severe. These local lockdowns have caused huge concern in parts of the country most affected, in particular the north where Boris Johnson will be keen to maintain the support he gained during the last election.

The ratings agency Moody’s has cut the UK’s credit rating, citing a poor fiscal outlook and increasing debt burden. This is unlikely to have any material impact on markets but is a reflection of the worsening picture for the UK economy.

The UK has officially signed a trade deal with Japan, the first with a major economy since Brexit. The deal largely preserves the terms under which the two countries traded when the UK was part of the European Union. Whilst good from an optics perspective, the deal is only predicted to add around 0.07% to GDP over the next 15 years.


The European Union regulators are set to place the vaccine front-runner from AstraZeneca under an accelerated review. So-called ‘rolling reviews’ are used in emergencies to allow regulators to see trial data while the drug development is still ongoing, to speed up approvals of drugs that are urgently needed. Meanwhile the US is taking a closer look into the illness that caused trials to briefly halt last month. Progress in vaccine development is in sharp focus at the moment, with coronavirus cases across Europe soaring ever higher as governments increase testing and also attempt to restart economic activity.

France imposed a 9pm to 6am curfew in Paris and eight other major cities as it struggled with a surge in infections that is filling hospital beds. Italy has banned some sporting events, forced bars and pubs to close at 10pm, and changed school hours to ease congestion and people traffic at those times. Germany has posted a record increase in daily cases and was aiming for a more measured approach to restrictions. Much of this has come to nothing though, forcing governments into more extreme measures. France will once again enter into a national lockdown for the entirety of November as it seeks so stem the almost

The outlook economic for Europe looks extremely mixed, with countries now determined to open up their economies again and get people back to work, but struggling to balance that with an out-of-control virus.


Both Donald and Melania Trump tested positive for COVID-19 at the start of October, just weeks before the election and with a million mail-in votes already sent. Stocks fell immediately on the news on increased volatility, as uncertainty seemed to grip markets, sending safe haven assets higher. Thoughts turned briefly to how this news may affect the election campaign. If Trump is unable to stand, Vice President Mike Pence will likely be chosen as the Republican candidate. Commentators believe this may make for a closer result. It is doubtful though that Trump will choose not to run, with only severe health complications likely to stop him.

Trump has meanwhile been tweeting that he has instructed officials to stop negotiating with democrats over a new stimulus package, sending markets downwards. This came only hours after Fed Chair Jerome Powell appealed to the government for aid, warning not enough was being done to support the economy, as news came that the US added fewer jobs than anticipated in September. He has since backtracked on these remarks and continued negotiations, but his volatile attitude will hardly help calm markets. Steven Mnuchin has described any chance to get a stimulus deal before the November election as “unlikely”, with Republicans and Democrats blaming each other (what’s new?) for the lack of progress.

Ahead of the election, Joe Biden remains strongly ahead in the polls, with markets looking at a potential Democratic sweep of both Houses. In this event Biden will find it much easier to make more sweeping changes and enact more of his agenda without heavy opposition. Biden remains heavily ahead in the polls, and his campaign strategy continues along the path of limiting gaffs, rather than making aby bold moves. Over 40 million Americans have already voted so far, with the theory being early voting will benefit Biden over Trump. The key to the result will remain the swing states though, where Trump has more core support. This election is far from over, despite what the polls would suggest.

Positively, US GDP growth rebounded at a record pace in the third quarter, rising by 7.4% over the period. This leaves the economy roughly 3.5% smaller than at the end of 2019. The recovery though looks likely to stall as COVID cases continue to mount, at least until we see a medical solution ready for market.


The Bank of Japan cut its growth forecasts for the year, saying it sees a more volatile path ahead as a recovery in demand for services might take longer than initially thought, and citing expectations that inflation will be negative in the near term as a direct result of the pandemic. The impacts of the pandemic have been widely felt across the Japanese economy, with retail sales falling 8.7% year-on-year in September, and industrial output remaining below last year’s level. Policymakers did revise their growth forecasts for 2021 higher though.

China’s economic recovery continues at pace, reflected in the ongoing outperformance of Chinese equities over global peers, with data from China reporting industrial sector profits climbing roughly 10% in September from a year earlier. China’s immediate control of the virus has proved a huge success for the domestic economy.

Reflective of China’s increasing dominance, corporate giant Ant Group is set to raise roughly $35 billion for an 11% stake in the world’s largest ever IPO. This will value Ant at about $280 billion, and is a sign of the ever-growing importance of Chinese companies to global investors.

Please note: The opinions expressed in this update are those of A&J Wealth Management Limited only, as at 2nd November 2020, and are subject to change. The update is for information purposes only. Source: Financial Times.

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