News

The clear election result in the USA led to a continuation of the “Trump trade”. US equities, led by second-line stocks, rose significantly, while European stocks suffered losses. The US dollar strengthened and yielded on government bonds rose. Economic reports were largely ignored in this market environment dominated by political news. The US economy continued to grow robustly in the third quarter at an annualized rate of 2.8 percent. The main driver was once again private consumption. However, the US labour market figures for October were disappointing, although they were distorted downwards due to strikes and hurricanes. However, the unemployment rate remained stable at 4.1 percent. The Fed's last meeting, where key interest rates were cut by 25 basis points to a range of 4.50 to 4.75 percent as expected, also attracted little attention. Market participants are currently expecting a further cut of 25 basis points in December, after which a more wait-and-see approach is expected.

The fact that the fight against inflation cannot yet be declared over was reflected in the local inflation data for October. Compared to the previous month, consumer prices rose by 0.5 percent and the annual rate jumped back above the ECB's 2 percent target at 2.4 percent. The prospect of persistently high deficits in the wake of Trump's victory and a Republican Congress caused yields at the long end of the US yield curve to rise further. Ten-year US Treasuries continued to rise accordingly and closed the week at 4.31 percent. The yield on ten-year German government bonds also climbed, closing at 2.37 percent. In this environment, corporate bonds with investment-grade and high-yield ratings outperformed, which benefited the bond side of Moventum portfolios overall.

Global equity markets rose significantly in the last two weeks, driven by developments in the USA, while European equities recorded losses. The Japanese equity market outperformed, while the emerging markets developed positively but were not quite able to keep up with the dynamic performance of the industrialized nations. Within Europe, the portfolios were helped by the addition of small caps, which outperformed, and exposure to the value segment. Small and mid-caps also performed significantly better than large caps in the USA. As a US small cap fund was added to the portfolios at the beginning of the quarter, it was possible to participate in this accordingly. At sector level, the healthcare sector, which is highly weighted in the portfolios, lost out in the “risk-on” environment. By contrast, the financial sector and the technology segment outperformed - both are included in the portfolios with high weightings.

In this environment, all global Moventum portfolios performed positively in the last two weeks. While the equity-heavy strategies were not quite able to keep pace with the dynamic market performance, the bond-heavy strategies benefited from their shorter duration orientation and the addition of corporate bonds. On the equity side, exposure to second-line stocks supported the performance. However, exposure to emerging markets and Europe had a negative impact on performance. The PWM portfolio performed slightly positively in a dynamic market environment. Following the very positive contributions in the previous weeks, the gold position corrected in the last two weeks. The two European equity funds were also unable to escape the negative environment in this country. On the other hand, the PWM portfolio benefited from its small cap exposure in Janus Henderson Global Smaller Companies. On the bond side, results were mixed in an environment of rising yields. Funds with duration exposure suffered, while short-duration and floater strategies mostly performed well. Mixed funds benefited from their international positioning and the positive performance of the global equity market. Among the alternatives, Aquantum's hedging fund recorded a price decline.