Share performance in Nov 21

Summary

The problem with doing a monthly share performance roundup is that it can disguise turbulence within the month. On the surface, a mere 0.6% rise in NASDAQ and a 1.9% rise in the FTSE Software and Computing Services Index (which most closely tracks the UKHQed stocks we follow on HotViews) looks pretty benign. But the existence of the omicron C-19 variant was only publicly acknowledged a week ago. Since then it has sent shock waves through both the markets – and the lives of every citizen.

As I write, I think it is fair to say that nobody really knows how serious this variant will be. If the worst fears are born out then we are certainly in for a pretty rough time (again) The effects on the shares of those involved in travel, hospitality etc are easy to predict. Indeed we have already seen major falls in the likes of IAG, Carnival etc. But tech is more difficult. Indeed, tech was a major gainer during previous C-19 lockdowns. It could well see the same bounce again. However, I am reminded of a speech given by Philip Hughes of Logica many decades ago when we were facing (yet another) recession in the UK. He said ‘Don’t forget, we all drink out of the same soup bowl’. If our clients are affected, then we will suffer too. Indeed many tech companies serving specific vertical industries suffered badly from the knock on effects of C-19 on their core customers in 2020.

The Future?

All I can say is that the future outlook for stock markets seems more uncertain than it was only a month ago. Before there was optimism that we might, at last, see an end to the C-19 tunnel. Now we seem to be plunged into darkness once again.

Inflation and interest rate rises were on the cards. Will Omicron put paid to that in the short term? Will Tech gain from another lockdown as it did last time? Or will the travails of its major customers in the most affected sectors curtail growth?

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Posted by Richard Holway at '09:58'