Our monthly portfolio positioning commentary.
The world continues to be on a path towards post-pandemic normalisation.
However, it is clear that the economic disruption has not yet ended. The new Omicron Covid variant, labour shortages, supply-chain disruptions, and inflation, could impact corporate profit margins.
The global economy continues its recovery from the pandemic. However, concerns around inflation have resurfaced, leading to equity markets giving back some of the gains they made in September.
Inflation has risen beyond most central banks stated targets, leading to a number of them signalling that interest rate rises are getting closer.
Equity markets have generated solid returns on the back of strong corporate earnings, which have been supported by the labour market recovery and increased consumer spending, as global economies have reopened.
COVID-19 has undoubtedly caused worldwide disruption to the global
economy. It brought about restrictions on movement through lockdowns and required extraordinary monetary and fiscal stimulus to curtail the economic damage. However, as vaccine rollouts have gathered momentum allowing economies to gradually reopen, global growth is recovering and consequently led stock markets to continue on a positive trajectory.
Investor’s have been given pause for thought over the last month, with the spread of the Delta variant of COVID-19 and softening economic data. This suggests that the global recovery post pandemic may be slowing slightly.
Following the impact of the Pandemic on global economies, we have experienced one of the sharpest recessions in history, followed by one of the strongest recoveries.