Despite the wobble in markets as we entered October, American markets breached all-time highs as the month concluded, the UK saw a surge in the pound and central banks continued to take measures to mitigate the risks of a slowdown to the global economy.
We saw the pound recover in value against other currencies as markets reflected the optimism of a new deal being reached. However, the UK once again walked away from a potential deal with the EU and parliament voted in favour of Boris Johnson’s call for a December snap election to end this political stalemate as he seeks a majority. Close to 100 years ago, when the UK last had a December election in 1923, the Conservatives won the most seats, but the final verdict ended with a hung parliament. UK markets suffered the worst performance among the major indices in October as the FTSE 100 and FTSE All-Share dropped 2.2% and 1.7%, reflecting the recovery in the pound which increases the relative cost of FTSE 100 exporters, thus slowing demand. Our Man GLG UK Income Professional fund gained 0.5% over the month.
US and Chinese authorities have moved in a positive direction after the announcement of what President Trump has called a “Phase One Trade Deal”. The deal that involves a delay in tariffs and additional Chinese purchases of US agricultural products brought equity markets climbing at the end of October. Among all this positive news on trade, we don’t think a permanent deal will be reached anytime soon as both sides will still fight to be the leader in Global technology and there is always the concern that President Trump could decide to escalate the trade rhetoric to bolster some extra support ahead of his 2020 election campaign.