SNAPSHOT2 min read

Market update – November 2021

The rebound in corporate earnings continues to support global equities.



Charities Team

Equities stage a rapid recovery

After a dip earlier in the autumn, global shares are once again approaching record levels. Even the FTSE100, which remains below its pre-pandemic peak, has reached new highs for the year. The moves may reflect a degree of investor exuberance, but they are not entirely divorced from fundamentals: for companies in the MSCI AC World Index, profits for 2021 are set to be some 20% higher than in 2019. Third quarter earnings reports have so far generally confirmed the encouraging picture. While companies are reporting higher costs, higher volumes and prices have allowed them to protect margins. Whether this will remain the case is a key question for 2022. Investors have also been reassured by recent developments in bond markets and China. Yields on longer-term government debt have stabilised, even as shorter-dated instruments start to price in interest rate rises. Meanwhile, the Chinese government has publicly called for property developers to continue making payments on their international bonds, allaying fears of a disruptive default. 

UK Budget may be prelude to rate rise

Tax increases announced earlier in the year, combined with the UK’s stronger-than-expected recovery, allowed Rishi Sunak to both increase spending and forecast an improvement in the UK’s debt trajectory. The easier fiscal stance may encourage the Bank of England to follow through with a mooted interest rate rise, potentially as soon as this month. Despite a more generous Budget than many feared, higher interest rates could add to the pressure facing UK consumers next year. In addition to higher national insurance contributions, they will also have to contend with sharply higher energy prices alongside higher prices for many other goods and services.                        

COP26: the implications for investors

Critics have noted that the UK Budget lacked any mention of policies or investments designed to support the energy transition, even though it was delivered just days before the COP26 summit. The omission is a reminder that implementing detailed emissions reduction measures is far more challenging – both politically and economically - than setting long-term, high-level targets. Even so, COP26 could result in agreements that force companies and governments to accelerate the transition to more sustainable economies, with potentially far-reaching implications for growth, inflation and profitability. Much will depend on the extent of international cooperation, especially between the US and China.

Portfolio positioning

We expect that the ongoing economic recovery and low interest rates will remain supportive of equity markets. We continue to see opportunities in longer-term themes, such as energy transition, technology and healthcare. We also have exposure to higher-quality companies in more cyclical sectors, as economies fully reopen and businesses increase capital expenditure. However, we may be heading towards a more volatile period for markets as growth momentum cools, inflation remains at somewhat elevated levels and central banks begin the process of normalising monetary policy. We therefore maintain our exposure to diversifying and defensive assets within multi-asset portfolios.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


Charities Team


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