Since we released our Q3 Investment Update at the beginning of October, risk assets have rallied fairly convincingly, with the main equity indices around the globe reaching new all-time highs and with Europe even seeing six consecutive weeks of higher trade up until the middle of the month. This bounce in prices has been followed by what has been a relatively sharp pullback on the back of news of the new Omicron Covid-
19 variant, and has been accelerated by some more hawkish comments from Fed Chair Jerome Powell than we have been used to in recent times. The emergence of the Omicron strain represents a potential risk for the outlook for the global economy and in this regard, will potentially have considerable implications for the upcoming central bank policy meetings for the ECB, Fed, and BOE in the middle of December.
As you will read in the following pages, we remain positive on equity markets over the medium and long terms, despite recent price volatility, as low interest rates, remarkably loose financial conditions and positive corporate commentary outweigh inflationary fears, geopolitical concerns, and recent Covid worries. We acknowledge that concerns surrounding supply chain constraints also remain in the minds of investors at
present, and quite possibly even more so now that we have Omicron to contend with. However, it is important to remember that the positive demand story underlying this factor will bode well for the medium and the long run.
In addition, with the COP26 global climate summit having taken place during November (see appendix 1 for Outcomes of COP26), we expect an increased focus in markets on environmental, social and governance (ESG) factors.
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