Market update – November 2019

A summary of our current economic and market views.


Charities Team

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Stocks and bonds remain in demand amid slowing growth

Initial data on third-quarter GDP suggests that the pace of global growth continues to cool. US output grew at an annualised rate of 1.9%, the slowest pace of the year, while the eurozone likely experienced negligible growth.

More encouragingly, consumer spending remains resilient and we expect this will keep global growth in positive territory. Against this uncertain backdrop, bonds remain close to the record highs they achieved over the summer.

Global equities continue to grind higher, led by the US. Both asset classes have been boosted by supportive monetary policy, while equity investors have been encouraged by signs that trade tensions between the US and China are easing.  

Fed takes a pause, continuity at ECB

Following its third interest rate cut of the year, the Federal Reserve suggested that monetary policy would remain on hold for now. While the US central bank downplayed the prospect of interest rate rises, markets could experience higher volatility if there is concern the Fed is moving away from its supportive monetary stance.

In Europe, Christine Lagarde has assumed the presidency of the European Central Bank. She is widely expected to follow her predecessor’s approach, attempting to stimulate the economy though very accommodative monetary policy while encouraging eurozone member states to raise spending.  

Risk of no clear Brexit outcome after UK election

Though the risk of a “no-deal” Brexit has fallen, a wide range of Brexit outcomes is still possible following next month’s General Election. If the Conservatives win a majority, as currently predicted by polls, they should be able to push their Brexit deal through Parliament. However, other outcomes – such as a hung parliament – could intensify uncertainty over the coming months. Sterling and UK stocks may experience heightened volatility as we head towards the election.

Portfolio positioning

We have not made significant adjustments to our portfolio over the past month. We retain a neutral allocation to equities. Our equity exposure remains well-diversified by geography and style and we do not expect the election or Brexit to have a significant impact on portfolios overall.

Though bonds have retreated slightly from their recent highs, we still consider them expensive and maintain our underweight position. By contrast, we continue to like alternatives as a means of increasing diversification. We also continue to hold a slightly overweight position in cash, which allows us to quickly take advantage of any opportunities that may arise.


Charities Team

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Limited 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped and monitored. 

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James Brennan

James Brennan

Portfolio Director