November started off on a positive note as there were encouraging signs from an economic perspective, however markets were impacted by rising COVID hospitalisations in Northern Europe and concerns about the new Omicron variant. As a result, developed market equities ended the month down slightly while more cautious assets including government bonds rallied.

In terms of COVID, the extent of restrictions imposed so far has varied across countries depending on the number of hospitalisations. In Belgium and Germany where the rate has been rising at a sharp rate, work from home restrictions have been implemented while Austria is now under full lockdown. Meanwhile in the UK, where booster jabs so far seem to be doing a good job of restricting hospitalisations only limited measures have been reintroduced with travel sector seeing the main impact. It is unclear at this stage whether mutations in the Omicron variant will significantly reduce the effectiveness of existing vaccines in preventing more severe illness.

November also marked the start of the UN Climate Change Conference (COP26) where leaders from around 200 countries convened, with hopes that they could take decisive actions to limit global warming. Several new announcements were made in areas including coal, deforestation and methane emissions, but progress was limited in terms of the scale and specificity required to be more confident that disruptive climate outcomes can be avoided. On a more positive note, climate change turned out to be one of the areas where China and the US agreed to work together during their virtual summit.

Concerns over US inflation at 6.2%, which is now at its highest level in 31 years, were outweighed by the strength of the labour market as retail sales were resilient and increased. On the policy front, Jay Powell was reappointed as Federal Reserve Chairman for a four-year term. Monthly bond purchases are planned to be reduced to zero by the end of June 2022 and the pace of tapering is less likely to increase in the near term given the uncertainty around Omicron. During the month, President Biden signed a long awaited infrastructure bill to upgrade America’s roads, bridges and railways and deploy electric vehicle charging stations across the country.

In Europe, economic data was mixed in November partially due to COVID concerns which has so far been more severe in Germany than in France. Restriction measures together with inflation reaching 4.1% in October have weighed on consumer sentiment which has decreased slightly in recent months but remains at pre-COVID levels. On the political front, the leader of the German Social Democrats is set to become the new German Chancellor, and has set ambitious climate targets such as phasing out coal from Germany’s energy mix by 2030.

Economic momentum remained strong in the UK mainly because it has been less affected so far by the latest COVID wave. Labour market data continued to strengthen despite it being the first month without the government’s furlough scheme; consumer confidence and retail sales increased. Business activity was better than expected and has shown slight improvements in terms of supplier delivery times, which was encouraging ahead of the Christmas season, however Omicron may threaten to intensify supply shortages and inflation. While sterling weakened against other major currencies and UK Equities (FTSE All Share) fell -2.2% in November, gilts strengthened on the back of the Bank of England’s decision to keep interest rates on hold in November and on concerns that Omicron could further delay rate rises.

While the emerging market economic backdrop has shown improvement in recent weeks, equities and bonds fell in November, again due to COVID concerns. Macroeconomic data coming from China has been positive as exports increased for the third month in a row driven by strong demand from Europe, along with growth in retail sales and industrial production ahead of market expectations. There is some optimism that the period of imposing tighter regulations on certain business sectors is drawing to a close but geopolitical tensions remain a concern.

The COVID resurgence and new variant has yet again increased market volatility and tempered optimism slightly. It is likely to remain a key concern over the coming month or at least until we have more clarity on its potential effects and if it can evade existing vaccines.

Going forward, markets should continue to be supported by a relatively strong economic backdrop, with monetary policy likely to become slightly less supportive next year. The normalisation process will be gradual and fiscal policies may remain accommodative.


Market Performance


2021 Year to Date
FTSE All-Share +13.04%
FTSE World ex-UK +19.92%
FTSE Actuaries UK Conventional Gilts All Stocks -2.57%
FTSE Actuaries UK Index-Linked All Stocks +10.26%


Total returns in GBP to 30/11/2021



Key Rates  
Bank of England Base Rate 0.10%
Inflation (Retail Price Index)* 6.00%


* October 2021

Source of data: FE Analytics,,

The content contained in this article represents the opinions of MacIntosh & James Partners Ltd. The commentary in no way constitutes a solicitation of investment advice and should not be relied upon in making investment decisions. Past performance is not a reliable indicator of future results. The value of your investments can fall as well as rise and are not guaranteed.