Data released in the US was for the most part positive. Consumers continue to spend in November, with real personal spending rising by 0.3% with inflation continuing to moderate. The gain in spending was supported by a 0.4% gain in real disposable personal income, which reflected the fastest gain in eight months. The European Central Bank (ECB) delivered a mixed monetary policy announcement, acknowledging slower economic growth and inflation across the Eurozone, but holding the line on its monetary policy stance despite acknowledging that inflation is expected to gradually decline.

The UK economy shrank slightly in the third quarter with GDP revised down by 0.1% in the three months to September.  This trend continued into October with GDP declining by 0.3% month-on-month, more than the expected 0.1% decline. Services activity fell by 0.2% during the month, while industrial output fell by 0.8%. While inflation at 3.9% was well below the 4.4% year-on-year increase in consumer prices predicted by economists in a Reuters poll and was the lowest inflation rate since September 2021, wage growth in October albeit declining to 7.2% is still probably at a level too high for the Bank of England (BoE) to contemplate rate cuts.  The BoE repeated in its monetary statement that “monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term.” However, the decline in the UK inflation resulted in heightened expectations of an interest-rate cut early next year which triggered a slide in the Pound and a rise in the equity markets.

Globally the stock markets continued their positive performance for the second month in a row as they responded positively to the improved inflationary and interest rate outlook for the world economy with the tech heavy NASDAQ up by 5.52%.  The S&P500 also benefited from the positive sentiment in the equity markets, reporting an 4.42% improvement over the month as did the MSCI which was up by 4.81%.  In the UK, the FTSE250 was the stand out, up by 7.99% while the FTSE100 was up by only 3.75%.  The smaller end of the market performed much better, with the AIM All-Share Index up by 6.94%, the Small Cap Index up by 6.97% and the Fledgling Index up by 4.34%.

The Athelney portfolio performed well in absolute terms and as compared to the indices, up by 8.3% during the month.  After allowing for expenses, including a substantial increase in audit fees, the NAV reflected an increase of 7.95%.

During the month we took advantage of the bid to take over Smart Metering and sold our stake using the funds to increase our holding in Impax Investment Management and Alpha Group.  Our cash holding at month end declined slightly to 3.2% of the portfolio.