Written by Cormac Nevin.
Last week was another challenging one for markets, as the MSCI All Country World Index fell -1.5% in GBP terms. In local terms, the Equity Index was down -2.9%, illustrating the strong fall in GBP vs other major currencies over the week. Sustained rises in interest rates also resulted in a negative week for Fixed Income, with the Bloomberg Global Aggregate Index down -0.9% in GBP Hedged terms.
Markets continue to fret about the energy crisis, particularly in Europe, as we approach the winter. These worries were compounded by Russia’s decision to indefinitely suspend flows of natural gas through the Nord Stream 1 pipeline to Germany, which prompted a renewed surge in wholesale gas prices. The reasons given were spurious concerns about very minor leaks, but European leaders are not in any doubt that this move is in retaliation for sanctions over the ongoing war on Ukraine.
OPEC has also floated the idea of supply cuts to oil production, citing concerns over global demand given the ongoing COVID-19 lockdowns in China. Political changes in the UK, Italy, and mid-term elections in the US will give the markets plenty to focus on towards the end of the year, but we remain convinced that the diversification of our portfolios will allow us to react to events as they arise with our typical long-term approach.
