3Q 2020 Market and Economic Overview

The third quarter of 2020 was described as a crossroads, with the US presidential election, the course of the virus, further lockdowns and US-China trade relations as the main themes. The MSCI World Equity Index rose 7.67% over the quarter. US equities rose 7.59%, Chinese equities 10.17% and Japanese equities 4.02%, while euro area equities fell 1.25% and UK equities fell 4.92%. The report noted that six large technology companies made up 25% of the S&P 500 Index's market capitalisation as of 16 September and accounted for all of the index's gain for the year to that date.

Fiscal support was a central topic. Negotiations in the US Congress over a new stimulus package had not concluded, and nearly 30 million Americans were no longer receiving additional federal unemployment payments after the end of July. Preliminary purchasing managers' indices for September showed European services activity returning to contraction. The US Federal Reserve moved to target average inflation, allowing inflation to overshoot its 2% target. Its preferred measure, the core personal consumption expenditure deflator, rose 1.3% in the 12 months to 30 June 2020. Government debt in developed economies was expected to rise by around 15% of GDP.

In the UK, negotiations on a trade agreement with the EU were described as at a stalemate ahead of the year-end deadline, and the Bank of England had begun to examine how a negative base rate could be implemented. As of 16 September the FTSE 100 was the worst performer among the major developed market indices for the year.

In currencies, the euro rose 4.32% against the US dollar over the quarter to 1.17 and sterling rose 4.15% to 1.29, while the dollar fell 2.81% against the Swiss franc to 0.92 and 2.30% against the yen to 105.45. Gold rose 5.82% to USD 1,885.44, and WTI crude stood at USD 40.17, down 34.21% for the year to date. Inflation was 1.30% in the US, -0.20% in the euro area, 0.20% in the UK and -0.90% in Switzerland.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group AG, Ober Altstadt 18, 6300 Zug, Switzerland.