They move in mysterious ways

04 September 2020

We are all human and we are aware of the catastrophic effects of the way COVID-19 has moved through communities across the globe. As our scientists seek to find a suitable vaccine solution, understanding increases as to how the virus affects various groups, which seems to be dependent on their age, health and ethnicity, amongst other factors. However, it affects people, and you would have thought it would affect sentiment, and in the case of this blog, investment sentiment, in the same way across the globe.

Far from it, with some markets remaining undervalued in our view, and some towards the top end of their value.

The next notes are market observations, rather than any individual advice, noting of course that past performance is not a guarantee of future performance.

I have made a simple comparison of example UK (FTSE All Share) and US (S&P 500) indices as examples to see how they have performed over the last year's period:

US (S&P 500 Index)

Date

Index Value

Comment

21 August 2019

2924.42


23 March 2020

2237.39

Bottom

20 August 2020

3385.51

Variance from bottom 33.92% approximately

UK (All Share Index)

Date

Index Value

Comment

21 August 2019

3904.60


23 March 2020

2738.41

Bottom

20 August 2020

3354.33

Variance from bottom 18.37% approximately

It should be noted that neither of the indices chosen are a barometer of growth / value overall; however, they do provide an indication of what has changed over the last 12-month period. As an additional example, the FTSE100, from its lowest recent point, has moved forward to 20 August 2020 by 16.54% approximately. As you can see the variances in growth from the bottom of the markets, which were around 23 March 2020, are significant. As to why, this might in part be due to sentiment, with many sectors in the US, such as technology, doing well.

It is also important to note that currency issues remain a concern, with the US dollar currently losing favour in the global markets at this time. As at 20 August 2020, the US dollar has seen the following variances over the last year:

GBP vs US Dollar

Date

GBP vs US Dollar

Comment

20 August 2019

£1.212


19 March 2020

£1.140

Bottom over 12 months

20 August 2020

£1.321

Variance from bottom 13.8% approximately

With the US election now looming large on the horizon in November 2020, it will be interesting to see how this differential changes.

If you would like to consider your future investment and pension planning, then please do contact us at our Guildford office.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS

Director

Chartered Financial Planner

Chapters Financial Limited