Recent data from the US confirms that their economic expansion continues at a strong pace while at the same time inflation has started to slow. Real GDP for the third quarter was revised upwards to 5.2% from the previous estimate of 4.9%. On the inflation front, the Case-Shiller Home Price Index rose by 3.9% over the twelve months to September 2023 as compared to the prior twelve-month period when home prices were up 19.1% and the year before when they increased by 10.5%. 

The same trend is evident in Europe where inflation in November fell far more than expected, to 2.4% on the back of falling energy prices and lower growth in food and services prices. Core CPI rose 3.6%, which was the slowest pace of increase since April 2022.

In the UK, recent official figures showed that mortgage approvals rose more than expected in October, pointing to a stabilisation in the property market after a prolonged period of low house sales. Separately, UK business activity grew marginally in November easing fears of the economy contracting in the last three months of the year. The UK PMI Composite Output Index, a measure of the health of manufacturing and service sectors, rose to 50.1, from 48.7 in October indicating that a majority of businesses reported an expansion rather than a contraction in business activity as had been the case since July. The recent cuts to business taxes in the Autumn Statement and the announcement that the ‘full expensing’ capital allowance regime will become permanent also provides a welcome boost to business.

The markets responded positively to the improved inflationary and interest rate outlook for the global economy with the tech heavy NASDAQ the standout, up by 10.7%.  The S&P500 also benefited from the positive sentiment in the equity markets, reporting an 8.92% improvement over the month as did the MSCI which was up by 9.21%.  In the UK, while the FTSE250 was up by 6.73% the FTSE100 was only up by 1.8%.  The smaller end of the market performed much better, with the Fledgling Index up by 6.24%, the AIM All-Share Index up by 4.99% and the Small Cap Index up by 4.03%.

The Athelney portfolio has up by 4.2% during the month.  After allowing for expenses, including a substantial increase in audit fees, the NAV reflected an increase of 4.03%.

There were no changes to the portfolio during the month.  Our cash holding at month end was unchanged, comprising 3.4% of the portfolio.